Race Day Live Retirees may face financial struggles as early predictions for the 2026 Social Security Cost of Living Adjustment (COLA) indicate a lower increase than in previous years.
According to The Senior Citizens League (TSCL), a non-partisan advocacy group, the 2026 COLA is projected to be only 2.1%.
This estimate is based on data from the Bureau of Labor Statistics’ CPI-W, the index used to determine annual COLA increases.
For comparison, December’s CPI-W stood at 2.8%. While this suggests inflation is slowing, it also means that retirees might not see much of an increase in their Social Security benefits next year.
COLA Decreasing Over Recent Years
The projected 2.1% COLA for 2026 would be the lowest increase since the COVID-19 pandemic began.
In 2025, COLA was set at 2.5%, down from 3.2% in 2024 and a steep drop from the 8.7% increase in 2023. The last time COLA was below 2.0% was in 2021, when it was only 1.3%.
A smaller COLA increase means that Social Security benefits may not keep up with rising expenses, making it harder for retirees to afford necessities.
Seniors Still Struggling Despite Slower Inflation
TSCL’s Executive Director, Shannon Benton, warned that even though inflation is slowing, it does not mean seniors are financially secure.
“Inflation slowing down doesn’t mean that seniors are catching up,” Benton said. “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 also mentioned that former President Donald Trump’s proposal to eliminate taxes on Social Security benefits could provide significant relief.
The tax thresholds for Social Security benefits have remained unchanged since the 1980s, meaning many seniors now pay taxes on their benefits due to inflation over time.
Many Seniors Rely Heavily on Social Security
For many retirees, Social Security is their primary source of income. According to a TSCL survey, 67% of seniors rely on Social Security for more than half of their income.
While lower inflation means prices are not rising as fast, it does not mean they are decreasing. This means seniors may still struggle to afford everyday essentials.
“This leaves many seniors facing a budget shortfall,” TSCL stated. “According to our 2024 Senior Survey, 62% of older Americans worry that their retirement income won’t be enough to cover basic expenses like groceries and medical bills.”
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How COLA is Calculated?
Social Security COLAs are meant to protect retirees from inflation by adjusting benefits accordingly. The COLA is determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The government compares the average CPI-W from the third quarter (July, August, and September) of the previous year to the same period of the current year. The percentage difference becomes the COLA for the following year.
If inflation is lower, the COLA adjustment will also be smaller. While this system is meant to help retirees keep up with inflation, some experts argue that it does not accurately reflect the costs seniors face, such as rising healthcare expenses.
Calls for Change
Many advocacy groups are calling for changes to how Social Security COLAs are calculated. Some suggest using a different index that better reflects the spending habits of retirees, such as the Consumer Price Index for the Elderly (CPI-E).
Others argue that Congress should increase benefits directly or eliminate taxes on Social Security payments.
With inflation still affecting everyday costs, a lower COLA may not be enough to help retirees maintain their standard of living. As lawmakers debate potential solutions, many seniors will continue to face financial uncertainty.
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