There’s some major news dropping in October that affects nearly every retiree across America: the announcement of the 2026 Social Security cost-of-living adjustment (COLA).
The Senior Citizens League (TSCL) is predicting a 2.7% boost (2), but that number isn’t locked in just yet.
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The final adjustment, delayed to Oct. 24 from Oct. 15 due to the government shutdown (1), depends on September’s inflation data, and it could move higher or lower depending on final figures.
In the meantime, what can seniors do to protect their retirement funds?
A boost that may get eaten up with rising prices
The COLA is intended to an automatic annual increase in Social Security and Supplemental Security Income benefits, and it’s meant to make sure that beneficiaries’ payments maintain purchasing power. The 2.5% COLA for 2025 currently impacts more than 72 million older Americans.
So what would a 2.7% COLA actually mean?
According to AARP, for the average retiree, it translates into roughly $54 more per month, or approximately $648 per year (3).
Survivors and disability beneficiaries would see smaller increases of around $43 per month.
Social Security bases the COLA on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This is tied to younger workers’ spending patterns, and not retirees.
In theory, any extra cash from a higher COLA could help go towards necessities like rising grocery prices, utilities and health costs.
But in reality, it’s not as straightforward as that — a lot of the increase could actually be absorbed almost right away.
Medicare Part B premiums are projected to climb by more than $20 a month in 2026, according to AARP (4), cutting into the COLA before it even hits seniors’ pockets.
Inflation also hasn’t cooled across all categories. Housing, health care and everyday essentials keep rising faster than the official inflation measure used to calculate COLA.
And if the adjustment lands lower than 2.7%, seniors could feel an even tighter squeeze on their wallets.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
How to prepare
Experts, like AARP, recommend that retirees plan carefully and conservatively to prepare for a lower than projected COLA — and not to bank on any projection until the official number is released.
Budget wisely
You can set a budget as if there won’t be an increase (as in 2015, most recently), pump the brakes on discretionary spending and keep your eye on rising expenses, especially medical and housing costs.
Be proactive
Pay down debt before interest rates eat into your budget, review your home, auto and health insurance plans for potential savings, and look into state and federal support programs.
Seek support
If you’re not sure about what to do, consider getting advice from a financial advisor who specializes in retirement income planning and ask how they can help you build a buffer against inflation.
A 2.7% COLA could provide some relief, but it won’t fully shield older Americans from rising costs. A wise way to be prepared is to hope for the bump, but prepare for less.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC (1); The Senior Citizens League (2); AARP (3); AARP(4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.