Retirees are anxiously awaiting news about their Social Security benefit increase for 2026, which will be announced in mid-October. While the exact number isn’t yet confirmed, estimates suggest a potential increase—and it’s not necessarily enough to keep up with inflation.
Latest 2026 COLA Estimate
The Social Security Administration (SSA) calculates the annual cost-of-living adjustment (COLA) based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This inflation measure compares the average CPI-W in the third quarter of the current year to the same period from the previous year.
In July, the CPI-W increased by 2.5% year-over-year. If this trend continues, retirees could see a 2.5% COLA for 2026, which is the same increase they received in 2025. However, The Senior Citizens League (TSCL), a nonprofit that advocates for seniors, believes the CPI-W rate might not stay steady.
TSCL uses a model based on inflation, interest rates, and unemployment data to forecast the COLA. Their predictions have steadily risen over the past few months, with May’s estimate at 2.5%, June’s at 2.6%, and their latest forecast for a 2.7% increase.
Will a 2.7% Increase Be Enough?
A 2.7% increase may sound decent, but it may not be sufficient for many retirees. According to a TSCL survey, nearly two-thirds of seniors are dissatisfied with their Social Security benefits, and 94% of respondents felt that the 2025 COLA of 2.5% was too low to keep pace with inflation.
TSCL’s Executive Director, Shannon Benton, cautioned that even with a 2.7% increase, many seniors will be disappointed. The core issue lies in the CPI-W, which doesn’t fully account for seniors’ unique spending needs, particularly in healthcare, which is often a large part of their expenses.
Another issue is the timing of the COLA. Retirees typically face higher costs before the COLA adjustment takes effect.
What Can Retirees Do?
If the 2026 COLA doesn’t cover the rising costs, retirees have several options to mitigate the gap:
- Tighten the Budget: Seniors may need to scrutinize their spending even more closely, which can be difficult for those already living on a tight budget. Taking advantage of government programs, such as the Medicare Part D Extra Help, can help lower costs for eligible individuals.
- Draw From Other Income Sources: For retirees with access to retirement accounts like IRAs or 401(k) plans, withdrawing more funds might help cover the increased cost of living. However, this should be done carefully, with guidance from a financial planner to avoid depleting accounts too quickly.
- Consider Part-Time Work: Some seniors may need to work part-time to supplement their income, though this won’t be feasible for everyone.
- Advocate for COLA Reform: A long-term solution might involve advocating for changes to the way COLA is calculated. 96% of seniors in the TSCL survey support reform, particularly replacing the CPI-W with a metric that more accurately reflects senior spending, especially on healthcare.
Contacting congressional representatives is one way to push for these changes.
The $23,760 Social Security Bonus Retirees Might Miss
While many retirees feel behind in their retirement savings, there are Social Security strategies that can help boost retirement income.
These lesser-known strategies could potentially add up to $23,760 more over a lifetime, ensuring a more comfortable retirement. It’s worth exploring these opportunities to improve your retirement outlook.
In short, while a 2.7% COLA increase may help a little, it may not be enough for many seniors to keep up with rising costs. Retirees need to stay proactive by managing expenses, exploring additional income sources, and advocating for reform to ensure long-term financial stability.
