More than 52 million retirees are registered Social Security beneficiaries in the U.S., taking home an average check of $1,997.13 per month as of March after a lifetime of hard work. While the benefit is meant to supplement income rather than replace it once a worker retires, according to Gallup polling, beneficiaries have increasingly become more reliant on Social Security since the millennium.
In an effort to keep up with inflation, Social Security benefits are subject to a cost-of-living adjustment (COLA) every year. But the next one might come as a disappointment. According to The Senior Citizens League (TSCL), the 2026 COLA forecast as of April 10 stands at only 2.3%, below the average of annual increases seen since 2010.
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So, what does this mean for American retirees, and what can they do to boost their savings so they can rely less on Social Security to replace their income in retirement?
A look at COLA
A 2.3% COLA increase in 2026 would be the smallest percentage increase since 2020. With inflation cooling, but still present, and experts anticipating tariffs will increase costs in the short term, many retirees may desire more from their monthly check.
So, how does the Social Security Administration (SSA) calculate the COLA? The figure is typically tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) within a specific period of time. The CPI-W measures inflation or deflation on 200 different price indices, allowing the SSA to track how consumer spending and buying power are affecting average Americans.
However, critics of the formula argue it doesn’t correspond to the spending of beneficiaries. Spending on health care, for example, is generally higher among retirees compared to the average worker, yet this is not reflected in the calculation.
In addition, COLA may not be keeping up with real inflation figures (keep in mind, they’re announced the year before being implemented). A study published by TSCL in 2024 showed that Social Security benefits had lost 20% of purchasing power since 2010, with inflation outpacing COLA in most years.
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How to protect your retirement savings
Are there ways retirees and those who are retiring soon can shore up their savings and become less-dependent on Social Security to pay the bills?
Investments may be key. Conventional wisdom says those already in retirement should opt for a safer mix of investments, relying more on bonds, securities and high-interest savings accounts. If you have the resources, dividend-paying investments can be helpful in retirement.
Many retirees who are worried about inflation eating away at their hard-earned savings invest in Treasury Inflation-Protected Securities (TIPS). These bonds are issued by the U.S. Treasury and are adjusted along with the rate of inflation, so your buying power is safeguarded as the bond grows. Conversely, however, investors receive lower payouts if deflation occurs.
Retirees should be careful budgeters, reducing their expenses to a minimum. It’s wise to review your spending regularly to account for every penny collected and spent. If you’re tech-savvy, many banks and tech companies offer spending tracking apps that you can use on your smartphone or online, helping you see your cash at a glance.
If you have trouble reining in your expenses, or are looking for more room in your budget for investing, consider speaking to a qualified financial advisor who can help you make the most of your retirement, and ensure that — whatever COLA increases are in your future — you can live well beyond your working years.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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