Retirees have only a couple of months left to find out exactly how much their Social Security benefits will increase next year. However, some projections are already available, giving seniors a preview of what to expect—and unfortunately, it’s not good news.
Losing Scenario #1: The COLA Isn’t Enough
The Senior Citizens League (TSCL), a nonprofit advocacy group, has estimated that the 2026 Social Security cost-of-living adjustment (COLA) will be 2.7%, which is slightly higher than the 2.5% increase seen this year.
While that might seem like a positive development, it may still not be enough to counteract the effects of inflation on seniors’ benefits.
Many experts have long criticized the way the Social Security Administration calculates COLA, especially given that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)—the inflation metric used to determine COLA—doesn’t take seniors’ unique expenses (like healthcare) into account.
In fact, TSCL’s 2025 Senior Survey found that 94% of respondents thought the 2.5% COLA was too low, with 80% of seniors believing inflation was over 3% based on their personal experiences.
The situation could get worse: the U.S. Bureau of Labor Statistics (BLS), which calculates the CPI-W, has scaled back the amount of data it collects due to staffing shortages. Some economists fear that these changes could affect the accuracy of inflation data, which would directly impact the COLA.
Losing Scenario #2: The COLA Comes Too Late
Even if the 2026 COLA accurately reflects inflation, retirees still face another problem: timing. The COLA adjustment comes too late to offset the higher costs seniors already face. For example, if inflation is 2.7% throughout 2025, seniors will pay higher prices for products and services all year long.
The COLA adjustment, however, doesn’t arrive until January 2026, after seniors have already dealt with the financial impact of inflation.
Additionally, the tariffs imposed by the Trump administration could affect inflation differently in the fourth quarter of 2025, meaning the COLA based on third-quarter data might not accurately reflect the price hikes seniors experience later in the year.
How to Win in Retirement
With the upcoming COLA increase seeming insufficient to fully address inflation, how can retirees navigate these challenges? The best strategy might be to reduce dependence on Social Security benefits for retirement income.
For those still in the workforce, saving more in retirement accounts like IRAs and 401(k)s is key. However, for those already retired, reducing reliance on Social Security is trickier.
Some may consider withdrawing more from other retirement accounts, but this could risk depleting those savings too quickly. Another option is working part-time to supplement Social Security benefits, although this may not be feasible for everyone.
The silver lining? Any COLA increase is better than none. While inflation is unlikely to drastically drop in the coming months, retirees can at least look forward to receiving some extra money to help counteract rising prices.
A Little-Known Social Security Strategy to Boost Retirement Income
Did you know there are little-known “Social Security secrets” that could significantly boost your retirement income? One such strategy could potentially add as much as $23,760 annually to your benefits.
If you’re looking to maximize your Social Security and retire with peace of mind, learning how to leverage these strategies could help you secure a more comfortable retirement.
