They may call it COLA, but many seniors say there’s nothing sweet about the Social Security Administration’s (SSA) cost-of-living adjustment for 2026.
The SSA’s 2.8% cost-of-living adjustment (COLA) increase, announced on October 24, falls short of the current rate of inflation — which is what it’s supposed to help offset for those collecting Social Security and Supplemental Security Income (SSI).
While the 2.8% increase is technically up from this year’s 2.5% jump, the September Consumer Price Index (CPI) released the same day showed that overall inflation hit 3% for the previous 12 months — with key items like food (3.1%), energy (2.8%), shelter (3.6%) and medical care services (3.9%) all rising over the last year. Shannon Benton, the executive director of the non-partisan advocate group The Senior Citizens League (TSCL), slammed the “meager” COLA increase that works out to about only $56 extra a month. (1)
“The 2026 COLA is going to hurt for seniors,” Benton added, noting that her group’s research shows that more than 10% of older Americans already live in poverty. “It’s about time our elected representatives show up for seniors, or else seniors won’t show up for them at the voting booth.” (2)
Meanwhile, an AARP survey found that an average of 77% of Americans over age 50 say that even a 3% COLA wouldn’t help “keep up with rising prices,” (3) while 64% of respondents in the Motley Fool’s annual COLA survey said the cost-of-living increase should be at least 6%. A third of those surveyed said it should be 10% or higher. (4)
The reality, however, is that not only did the 2026 COLA come in under the rate of inflation, but there’s another potential financial hit in store for Social Security recipients next year that could end up wiping out much of the benefit anyway.
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
Why older Americans are struggling to keep their heads above water
Stats from the Social Security Administration show that almost 58 million Americans over age 65 received Social Security, Supplemental Security Income (SSI) or both in August of this year. (5) Now, in addition to the “meager” COLA increase, experts are sounding the alarm about an expected 2026 rise in Medicare Part B premiums to $206.50 a month, up from the current rate of $185 per month. (6)
It’s an increase that Nancy Altman, president of the political advocacy group Social Security Works, warns “will consume almost half” of the COLA income for many recipients, and the whole COLA for others, “even as the costs of other necessities balloon due to the Trump tariffs.” She also said that even the COLA bump itself “is inadequate to fully cover rising costs, especially health care costs.” (7)
It’s an added financial blow considering TSCL research found that Social Security makes up the entire income of around 39% of seniors, or nearly 22 million Americans, while the monthly budget for the median senior comes in at under $2,000. (8)
Meanwhile, a Census Bureau report from earlier this year showed that Americans aged 65 and older were the only age group to see poverty within their cohort rise in 2024, going from 9.7% to 9.9%. Despite that, the report emphasized the importance of Social Security, noting that “approximately 70 percent of the people pulled out of poverty by Social Security (20.1 million individuals) fell into that age group.”
This all underscores why TSCL members want to change how the COLA is calculated in the first place. The group is pushing to ensure that the increase is based on the Consumer Price Index for the Elderly (CPI-E), which they say “is specifically designed to represent older Americans’ spending habits,” rather than the Consumer Price Index for Urban Wage Earners (CPI-W). TSCL added that the CPI-E “tends to come in higher than the CPI-W about 69% of the time, resulting in thousands of dollars in lost benefits for seniors.”
They’re also calling for a minimum COLA increase of at least 3% going forward. Over the last decade the COLA averaged an annual 3.1% increase and a 50-year average (from inception in 1975 to this year) of 3.8%.
Read more: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
Ways to make your money go farther in retirement
While the COLA increase may fall short of what recipients hoped for, there are ways to make retirement funds — be they savings or Social Security — go further.
Creating and sticking to a budget, meal planning, and cutting back on unnecessary expenses are all common and simple ways to stretch your dollar. To that end, the AARP offers a handy list of things to consider cutting out (and helpful alternatives to replace them), from warehouse store memberships and peak season travel to new clothes, collectibles and expensive gifts for the grandkids. (9)
As well, the National Council on Aging (NCOA) suggests investigating cost-savings benefits like Medicare Savings Programs, the Lifeline phone discount program and Low-Income Home Energy Assistance Program, and also has an entire site set up to help you find out if you’re eligible for other savings benefits. (10)
Others, meanwhile, note that it could be worth returning part-time to the workforce to bring in a little extra money each month. That could look like taking a job in retail or an office space, which also gets you out of the house and engaging with people each day, or remote work that offers a bit more flexibility. Additionally, consider trying to monetize one of your passions, whether it’s baking or artwork or anything else you love to do anyway that others may be interested in paying for.
Taking advantage of senior discounts is also always a smart tactic, whether it’s at the grocery store, a movie theatre, a museum or while travelling. Every little bit helps, and you’d be surprised how saving a few dollars here and there on the regular can add up.
Speaking of which, if you have little extra money on hand, a high-yield savings account offers a way to turn it into a decent nest egg with a combination of patience and the magic of compounding interest. Or, try investing in ETFs or low-cost stock index mutual funds, which Forbes recommends as a “straightforward and effective way to invest in the stock market.” (11)
For millions of older Americans relying on Social Security to cover basic needs, a 2.8% COLA may feel less like a raise and more like a setback. Advocates warn that if adjustments continue to lag inflation, the program will no longer fulfill its core promise of preserving retirees’ purchasing power. For now, Americans that rely on Social Security may need to take steps to bridge the gap.
What to read next
- Are you richer than you think? 5 clear signs you’re punching way above the average American’s wealth
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and ‘anyone’ can do it
- This tiny hot Costco item has skyrocketed 74% in price in under 2 years — but now the retail giant is restricting purchase. Here’s how to buy the coveted asset in bulk
- 22 US states are now in a recession or close to it — protect your savings with these 5 essential money moves ASAP
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Senior Citizens League (1), (2), (8); AARP (3), (9); The Motley Fool (4); SSA (5); MedicareResources.org (6); Social Security Works (7); National Council on Aging (10); Forbes (11)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.