Inflation surged once more in August, with the Consumer Price Index (CPI) climbing 0.4% for the month and increasing 2.9% year-over-year. This increase in inflation directly impacts Social Security’s cost-of-living adjustment (COLA), which is tied to changes in average costs.
The Senior Citizens League has estimated that next year’s COLA will be around 2.7%, based on recent data. But while this increase will provide some relief for retirees, there’s both good and bad news to consider.
The Good News About Next Year’s COLA Adjustment
According to The Senior Citizens League, based on the Bureau of Labor Statistics’ monthly CPI report, the 2026 COLA is likely to be around 2.7%. This is a significant increase from earlier estimates, including the 2.1% figure from January, and it surpasses this year’s 2.5% COLA adjustment.
For average retired workers, who receive around $2,008 per month, a 2.7% increase would result in an additional $54 per month. For retirees managing tight budgets, this extra income could provide much-needed relief.
The official announcement of the COLA will come in October once September’s inflation data is released, but unless significant changes happen this month, the 2.7% figure seems reliable.
COLA Estimate Progression:
September: 2.7%
August: 2.7%
July: 2.6%
June: 2.5%
May: 2.4%
April: 2.3%
March: 2.2%
February: 2.3%
January: 2.1%
The Downside to a Higher COLA
While a higher COLA may seem like good news, it reflects a troubling trend: rising costs. The COLA is designed to help Social Security benefits keep pace with inflation, but it often struggles to fully protect retirees’ purchasing power.
Over the past 14 years, Social Security benefits lost about 20% of their buying power due to inflation rates consistently outpacing COLA increases.
Additionally, factors like tariffs could further complicate the situation. If new tariffs are implemented in the coming months or next year, they won’t immediately factor into the COLA calculations, even though they will still affect retirees’ pocketbooks.
This could cause inflation to continue rising, making it harder for the COLA to keep up with the increased costs.
While the 2.7% COLA will be a welcome boost for some, it won’t be enough to fully shield retirees from the effects of rising costs, especially in critical areas like healthcare and housing.
How to Reduce Your Dependence on Social Security
Given the challenges that retirees face with inflation, it’s important to look for ways to become less reliant on Social Security. According to a 2025 Gallup poll, 62% of retirees consider Social Security to be a major source of income. However, if possible, finding other sources of income can provide better financial security.
Here are some ways to supplement your income:
Create passive income: Investments, rental properties, or royalties can generate additional funds.
Take on part-time work: Even a few hours a week can make a difference in covering rising costs.
Downsize or relocate: Moving to a more affordable location can significantly reduce living expenses.
While the upcoming COLA will help, it’s wise not to rely solely on Social Security to meet your financial needs. By diversifying income sources and reducing costs, you can better weather inflation in retirement.
The $23,760 Social Security Bonus Most Retirees Overlook
Many retirees miss out on little-known Social Security strategies that could provide a significant boost to their income. If you’re concerned about falling behind on savings, exploring these Social Security secrets could help ensure a more secure financial future in retirement.
