Race Day Live Retirees who depend on Social Security may face disappointing news next year. Experts predict that the Cost of Living Adjustment (COLA) for 2026 will be lower than in previous years, affecting the financial stability of millions of seniors.
The Senior Citizens League (TSCL), a non-partisan advocacy group, estimates that the 2026 COLA will be 2.1%.
This prediction is based on data from the Bureau of Labor Statistics’ CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), the index used to determine annual Social Security increases. For comparison, December’s CPI-W was 2.8%.
Inflation Cooling Down, But Is It Good for Seniors?
A lower COLA means that Social Security benefits will not rise as much as before. Since the COVID-19 pandemic, COLA rates have been decreasing.
In 2023, beneficiaries saw a significant 8.7% increase. However, the adjustment dropped to 3.2% in 2024 and then to 2.5% in 2025. If the prediction for 2026 holds, it would mark the lowest COLA since 2021, when it was just 1.3%.
TSCL’s Executive Director Shannon Benton warns that while inflation is slowing, it does not mean seniors are catching up financially.
“Inflation slowing down doesn’t mean that seniors are catching up. It’s essential that Congress acts quickly to fix years of sub-par COLAs and help give seniors the quality of life they deserve,” Benton said.
The Need for Policy Changes
One major concern is that COLA adjustments are not enough to keep up with actual expenses faced by retirees.
According to TSCL, 67% of seniors rely on Social Security for more than half of their income. Even with lower inflation, prices continue to rise, just at a slower pace. That means essential costs like food, rent, and healthcare remain high.
Benton points out that tax policies on Social Security benefits have not been adjusted for inflation since the 1980s. The Trump Administration’s plan to eliminate these taxes could provide relief to seniors.
“The current thresholds used to determine if you’ll pay taxes on your benefits were set up back in the 1980s, and we’ve never adjusted them for inflation,” Benton explained.
Many Seniors Struggling to Cover Essentials
Slower inflation does not mean prices are going down; it only means they are rising at a slower rate. This leaves many seniors struggling to make ends meet.
According to TSCL’s 2024 Senior Survey, 62% of older Americans worry that their retirement income won’t even cover basic needs like groceries and medical bills.
Without sufficient COLA adjustments, seniors could experience a budget shortfall, making it even harder to afford daily necessities.
How Is COLA Calculated?
COLA is designed to prevent inflation from reducing the value of Social Security benefits. It is calculated using CPI-W data, which tracks the average price of a basket of goods.
The Social Security Administration (SSA) compares the average CPI-W for the third quarter (July, August, and September) of the previous year with the same period in the current year. The difference between these numbers determines the COLA increase.
What’s Next for Retirees?
As 2026 approaches, many retirees will be keeping a close eye on inflation trends and government policy decisions.
While a 2.1% COLA is not confirmed yet, the prediction suggests that seniors may need to adjust their budgets and plan for financial challenges ahead. Advocacy groups like TSCL continue to push for better policies to ensure retirees receive the support they need.
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