Ashley Simpson
Retired Americans counting on Social Security’s annual Cost-of-Living Adjustment (COLA) to help offset rising expenses may face another year of bad news.
Preliminary projections for the 2026 COLA suggest that increases will once again fall short of keeping up with the real costs seniors face.
Surveys reveal that less than one-third of retirees feel confident about their financial security, largely due to persistent inflation.
Even though COLAs are intended to preserve retirees’ purchasing power, they’ve often failed to do so. In fact, since 2010, Social Security benefits have lost 20% of their purchasing power, according to senior advocacy groups.
Let’s break down the reasons why the 2026 COLA might not bring relief to those who need it most.
How COLAs Are Calculated
The Social Security Administration (SSA) determines COLAs using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This metric tracks price changes in eight major spending categories:
- Apparel
- Education and communication
- Food and beverages
- Housing
- Medical care
- Recreation
- Transportation
- Other goods and services
To calculate the annual COLA, the SSA compares the average CPI-W for the third quarter (July–September) of the current year to the same quarter in the previous year. If there’s an increase, that percentage becomes the COLA for the next year.
For example, the CPI-W rose 2.5% in Q3 of 2024, so benefits increased by 2.5% in 2025.
Why CPI-W Falls Short for Seniors
The major issue with the CPI-W is that it’s based on the spending habits of working-age Americans, not retirees.
Seniors typically spend a greater portion of their income on housing and healthcare, which have seen above-average inflation rates in 2025.
Here’s a breakdown of price increases through the first half of 2025:
| Category | Inflation Rate (First Half 2025) |
|---|---|
| CPI-W (Overall) | 2.4% |
| Housing | 3.9% |
| Medical Care | 2.8% |
If these trends hold steady through Q3, the 2026 COLA will likely be too low to reflect the financial realities faced by retirees.
As a result, benefits will lose more purchasing power, deepening the strain on fixed-income seniors.
Data Accuracy in Question for 2026 COLA
To make matters worse, the reliability of CPI-W data used for 2026 is under scrutiny. A federal hiring freeze implemented at the start of President Trump’s second term has impacted staffing at the Labor Department, which oversees inflation measurement.
Due to staffing shortages, the department has admitted to using a “less precise method” to estimate price changes.
This introduces further uncertainty into COLA calculations, meaning the 2.6% to 2.7% projected COLA for 2026 may be based on flawed or incomplete data.
Retirees Face a Growing Financial Gap
As COLAs continue to underestimate real-world inflation, especially for housing and medical costs, many retirees find themselves increasingly unable to cover essential expenses.
When COLA doesn’t keep up with inflation, retirees are effectively taking a pay cut in real terms.
Those relying solely on Social Security will be hit the hardest, particularly in states with high cost-of-living increases.
Even modest gaps between COLA and real inflation compound over time, potentially costing retirees thousands over their lifetimes.
Estimated 2026 COLA Predictions
| Source | 2026 COLA Estimate |
|---|---|
| Social Security Trustees | 2.7% |
| The Senior Citizens League | 2.6% |
| CPI-W-Based Trend Projection | 2.4% – 2.6% |
The 2026 Social Security COLA is shaping up to be another disappointment for retirees. With a flawed inflation measurement, higher increases in senior-specific costs, and reduced data accuracy due to staffing issues, the adjustment may again fall short.
Retirees must prepare for tightening budgets and explore strategies to maximize benefits, reduce expenses, or supplement income through other means.
FAQs
What is the expected COLA for Social Security in 2026?
The 2026 COLA is projected to be between 2.6% and 2.7%, though actual increases may vary depending on Q3 inflation data.
Why is the COLA not enough for retirees?
The COLA is based on the CPI-W, which does not reflect senior spending habits, especially in housing and healthcare.
Can retirees do anything to increase their Social Security income?
Yes, strategies include delaying benefits, maximizing spousal benefits, and coordinating with retirement accounts for optimal timing.