Many seniors across the U.S. are waiting to see how much their 2026 Social Security cost-of-living adjustment (COLA) will be. The official announcement is expected in October, and while any increase in benefits is usually welcome news, this year’s COLA may actually feel like a no-win situation.
Whether the adjustment is large or small, retirees may still struggle to keep up with rising prices and an uncertain economy. Here’s a breakdown of what to expect and why even a higher COLA might not bring much relief.
What Is a COLA and How Does It Work?
The cost-of-living adjustment (COLA) is a yearly increase in Social Security benefits, meant to help retirees keep up with inflation. COLAs are calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and they kick in automatically each year.
Over the last few years, retirees saw some historically large COLAs due to post-pandemic inflation:
2022 COLA: 5.9%
2023 COLA: 8.7% (the highest in four decades)
2024 COLA: 3.2%
2025 COLA: 2.5%
For 2026, early estimates suggest a COLA of around 2.7%.
Why the 2026 COLA Could Be Disappointing
At first glance, a 2.7% increase might seem like good news. But here’s why it may not be enough:
1. If the COLA is small, it’s less than retirees are used to.
After getting used to large increases over the past few years, many seniors may feel let down by a more moderate raise. Prices for essentials like food, gas, and housing have already jumped, and a smaller COLA may not go far enough to offset those increases.
2. If the COLA is larger than expected, it’s only because inflation is still high.
A bigger COLA sounds great—until you realise it means inflation is rising, which can erode your purchasing power, especially if your retirement savings are in conservative investments that aren’t keeping pace.
So, whether the COLA is smaller or larger, seniors still lose—either due to a modest increase or because inflation is hurting the value of their savings.
COLAs Aren’t Keeping Up With Real Costs
One of the main issues with the COLA system is that it may underestimate how much retirees actually need. The current calculation doesn’t fully account for the rising cost of healthcare, prescription drugs, and housing—expenses that hit seniors the hardest.
Experts argue that even a 2.7% COLA could leave many retirees falling behind financially, especially those on fixed incomes with limited savings or investment returns.
Retirees Need a Strong Financial Plan
If you’re retired or nearing retirement, it’s more important than ever to have a realistic, flexible financial plan. Here are a few key tips:
Stick to a budget: Track your spending and avoid unnecessary expenses.
Withdraw wisely: Follow safe withdrawal strategies (like the 4% rule) to stretch your savings.
Review investments: Ensure your portfolio is balanced and not overly conservative.
Plan for healthcare costs: Budget for medical expenses, which often rise faster than general inflation.
Look for extra benefits: Check if you qualify for Supplemental Security Income (SSI), SNAP, or Medicare Savings Programs.
Can You Still Get a Stimulus or Bonus in 2026?
There are no new federal stimulus payments planned in 2026. However, if you missed any previous benefits, you may still be able to claim them by filing your tax return before the final deadlines.
Some retirees may also be eligible for lesser-known Social Security strategies, such as delaying benefits to earn delayed retirement credits, which can significantly boost monthly payouts.
The 2026 Social Security COLA may offer a small boost, but it won’t be enough to solve the bigger problem: retirees are still falling behind. Whether the raise is modest or slightly higher, the impact of rising prices, limited savings growth, and high healthcare costs continues to weigh heavily on seniors.
