Here’s The Tough Truth About the 2026 Social Security Cost of Living Adjustment

Quick Read

• Social Security benefits lost 20% of their buying power between 2010 and 2024, according to the Senior Citizens League.

• A flaw in the COLA formula will likely lead to a disappointing raise in 2026 as well.

• Working is a better way to improve your financial picture than relying on your upcoming COLA.

• If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here

Inflation has a way of driving living costs up. That’s why Social Security’s annual cost-of-living adjustments, or COLAs, are so important.

The purpose of Social Security COLAs is to help ensure that recipients are able to maintain their buying power from one year to the next.

Social Security COLAs have been automatic since the mid-1970s, which means lawmakers do not have to vote in an increase every year. Instead, those increases are pegged to an inflation index.

In 2026, Social Security benefits are getting a 2.8% COLA, which is more generous than the 2.5% raise that came through in 2025. But that doesn’t mean seniors’ upcoming COLA will go very far.

Why 2026’s COLA may disappoint seniors

There are a couple of reasons why Social Security recipients may be unhappy with their 2026 COLA.

First, for seniors who are enrolled in Medicare at the same time, any increase in the cost of Part B will eat away at their upcoming COLA.

Second, Social Security COLAs have long done a poor job of actually helping seniors maintain buying power. And 2026’s COLA is unlikely to be an exception.

The nonpartisan Senior Citizens League says that between 2010 and 2024, Social Security benefits lost 20% of their buying power. And a big reason has to do with a flaw in the way COLAs are calculated.

Social Security COLAs are pegged to changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When there’s an increase in the CPI-W from one year to the next (specifically, during the third quarter of the year), Social Security benefits go up. When there’s no increase or a decrease, benefits stay where they are.

The problem is that the CPI-W doesn’t accurately measure the costs seniors on Social Security face. Rather, it measures the costs incurred by members of the workforce.

While it’s true that some Social Security recipients may still be working, for the most part, people who collect those monthly benefits are retired Americans who are not employed. And the costs Social Security recipients incur can be drastically different from the costs of working Americans.

Of course, this begs the question: Why are Social Security COLAs based on an index that isn’t specific to seniors?

It’s one that advocates have long asked, too. Some are pushing for a change to the COLA formula so that it’s based on a senior-specific index. But as of now, seniors are stuck with the CPI-W — which means COLAs are likely to lag.

Have realistic expectations

You may be hoping that your upcoming Social Security COLA will improve your financial picture in a meaningful way. The more likely scenario is that it won’t do much.

In time, lawmakers might change the way COLAs are calculated. Until then, you may want to take steps to boost your retirement income yourself.

The good news is that you’re allowed to earn a paycheck while collecting Social Security. Working part-time is a great way to give yourself a raise.

If you don’t love the idea of traditional work, try the gig economy. Gig roles allow you to work flexibly. And in some cases, they could allow you to do work you actually enjoy.

Either way, working in some capacity is a better idea than banking on a COLA that probably won’t go very far.

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