For retirees who rely on Social Security for most of their income, the past few years have been financially challenging. Despite inflation easing, living costs have remained high, and Social Security’s cost-of-living adjustments (COLAs) haven’t been enough to keep up.
The 2.5% COLA for 2025 left many seniors feeling frustrated, and they’re hoping for a more substantial increase in 2026.
2026 COLA Projections: A Slight Improvement
The good news for retirees is that the Social Security Administration (SSA) has projected a 2.7% COLA for 2026, based on recent CPI-W data. This is an improvement over the 2.5% increase for 2025 and slightly higher than the initial 2.6% estimate from the Senior Citizens League.
However, while a 2.7% increase might seem promising, retirees should consider the broader implications of this adjustment.
Why a Larger COLA May Not Be a Win for Retirees
The issue with a higher COLA is that it’s tied directly to inflation, which means it signals an increase in living costs. Inflation—especially driven by factors like tariffs—has been on the rise, and this could mean higher prices for goods and services across the board.
While a higher COLA might help retirees maintain their current purchasing power, it’s important to understand that COLAs have historically failed to keep up with inflation.
So, even with a larger raise, retirees may still find their buying power eroded by rising costs. In fact, the best-case scenario for retirees is simply breaking even—not getting ahead.
The Bigger Picture: The Importance of Supplementing Social Security
This highlights the need for retirees to have other sources of income beyond Social Security. For many current seniors, it may be too late to save significantly. However, it’s never too late to make lifestyle changes or consider part-time work to make up for the shortfall in income.
For younger workers, it’s essential to realize that Social Security’s COLAs won’t likely be enough to provide a comfortable retirement. Saving aggressively in IRAs or 401(k) plans now is critical to ensuring financial stability in retirement.
The $23,760 Social Security Bonus You Might Be Overlooking
For retirees who are behind on savings, there are still strategies that can help increase retirement income. Understanding little-known Social Security benefits and strategies can make a significant difference in boosting your retirement income—possibly even unlocking bonuses that many retirees overlook.
