Social Security COLA 2026 Projections: Protect Your Benefits With A High-Yield Savings Account

Seniors may see only a small bump in Social Security next year. The Senior Citizens League (TSCL) expects a 2.7% cost-of-living adjustment (COLA) for 2026, while inflation is still close to 2.9%, leaving little real gain.

One way to stretch those checks is to use a high-yield savings account (HYSA), where higher rates can provide an extra cushion against rising costs.

What Affects the Impact of the Raise

A COLA boost of 2.7% may sound positive. Still, for many seniors, that increase will be partly eaten up by rising Medicare Part B premiums and healthcare costs, which tend to increase faster than average inflation. The result: the net benefit isn’t always as significant as the headline percentage suggests.

Moreover, inflation as measured by CPI doesn’t always correspond to the costs faced most heavily by seniors. Health expenses, especially for those with chronic medical conditions or prescription drug usage, tend to rise faster. TSCL has often argued that the standard metrics understate inflation experienced by retirees.

How Accurate Are TSCL’s Projections Historically?

Reviewing past years gives confidence in TSCL’s forecasting. For example:

• For 2025, TSCL predicted a 2.5% COLA fairly early, which proved accurate. 
• For 2024, the group projected around 3.1%; the actual number ended up at 3.2%. 

While there’s always room for error, TSCL’s forecasts tend to come close to the official COLA figure released each fall. That means retirees and others on fixed incomes can reasonably plan around a 2.7% bump, while considering there could be slight adjustments.

Putting Inflation in Perspective

As recent U.S. Bureau of Labor Statistics data shows, if inflation is about 2.9%, a 2.7% COLA nearly—but not entirely—keeps up. The shortfall may look minor, but over time it chips away at purchasing power, especially in essential categories like groceries, housing and medical care.

For seniors who count heavily on Social Security, the real gain after inflation may be minimal once higher out-of-pocket expenses are factored in.

How High-Yield Savings Accounts Can Help

One way to help cover the gap is through a HYSA. These accounts, often offered by online banks or credit unions, currently pay rates well above traditional savings. Here’s how a HYSA can help seniors stay ahead:

• Boost COLA gains. A 2.7% increase in benefits and savings returns of around 3.5% can soften the hit from rising prices. 
• Protect emergency funds. Cash parked in a regular account loses value to inflation; a HYSA helps savings hold up better over time. 
• Stay liquid. Unlike CDs, HYSAs generally allow easy withdrawals, making them useful for unexpected bills. 

Still, there are trade-offs. HYSA rates can fall if the Fed cuts interest rates. Some accounts also carry minimum balance rules or withdrawal restrictions. For savers looking to earn more on their cash, HYSAs remain a solid option. Several banks offer competitive rates well above the national average:

• The American Express® High Yield Savings Account is simple to use, with a 3.50% APY. There are no fees or balance requirements, and interest is added monthly. Since there are no branches, everything is handled online, which works fine for transfers but not for cash deposits. The money is FDIC-insured. 
• The Synchrony Bank High Yield Savings Account also pays a strong rate with no fees or minimums. It’s also online, so you manage it through transfers and mobile access. Like Amex, there’s no branch support, but it’s FDIC insured. The current APY is 3.80%. 

American Express® High Yield Savings Account rates and details are accurate as of 07/23/2025. Synchrony Bank High Yield Savings Account rates and details are accurate as of . 

Bottom Line

TSCL’s current projection of roughly 2.7% for the 2026 COLA appears grounded in recent inflation metrics, and the group has a solid track record of accuracy in past years.

While that increase may not fully offset rising costs, especially medical expenses and premiums, pairing it with smart savings strategies—particularly using HYSAs—can help protect purchasing power and stretch benefit gains.

For many seniors, acting now to optimize savings returns may significantly increase the real value of their benefits.