For millions of retirees, the Social Security Administration provides vital income that enables them to live comfortably in retirement. Unfortunately for them, the most recent Social Security COLAÂ prediction for 2026 is not good. Social Security benefits may only increase by 2.2% in 2026, according to current estimates, which would be the lowest COLA increase in five years. Given the ongoing increases in housing and healthcare costs, most retirees may see a decline in their purchasing power as a result of this smaller COLA. The majority of pensioners depend only on Social Security benefits to cover their daily costs, so this is a double blow for them.
Experts confirm that the Social Security COLA will be nearly insignificant by 2026
The Social Security Administration normally bases COLA increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers. The CPI-W monitors inflation by assessing price fluctuations in goods and services. The Social Security Administration (SSA) calculates the Social Security COLA by comparing CPI-W statistics from the third quarter of the current year, which runs from July to September, to the same period last year. Social Security payouts increase in proportion to price increases. A 2.2% increase in COLA is still excellent, but it is below the 2.3% average that has been in place since 2010. In 2022, 2023, 2024, and 2025, the Social Security COLA grew by 5.9%, 8.7%, 3.2%, and 2.5%, respectively. Reasons Why the Anticipated 2026 COLA Increase Will Not Be Favorable to Retirees.
The fact that CPI-W is based on the spending patterns of Americans of working age rather than retirees is a significant source of worry. Price changes for groceries, entertainment, transportation, and food commodities—all of which are expenses for younger households—are given more weight by CPI-W. Though they are the two largest expenses for seniors, it is regrettably less concerned with changes in housing and healthcare costs. Recent inflation data shows that housing expenses have risen by 4.2%, about double the COLA estimate for 2026. Additionally, medical care services have increased by 3%, above the anticipated COLA. The purchasing power of Social Security benefits has decreased by 20% since 2010, according to a 2024 analysis by The Senior Citizens League (TSCL). In other words, in 2024, anything that cost $100 in 2010 now costs $120.
What could be the impact of a 2.2% Social Security COLA on benefits?
According to experts from Social Security, this is how much a 2.2% cost-of-living adjustment (COLA) could impact monthly benefits for retirees:
- If retirees earn a monthly payment check of $1,500 with the new COLA, they will receive $33 extra for a total of $1,533.
- If retirees earn a monthly payment check of $2,000 with the new COLA, they will receive $44 extra for a total of $2,044.
- If retirees earn a monthly payment check of $2,555 with the new COLA, they will receive $55 extra for a total of $2,555.
- If retirees earn a monthly payment check of $3,000 with the new COLA, they will receive $66 extra for a total of $3,066.
Even though these increases are significant, they are still quite small in light of actual inflation, particularly in the previously mentioned housing and healthcare sectors. If inflation picks up later in the year or if it keeps slowing down, the estimated Social Security COLA numbers can be different. Before the final numbers are revealed, a few months remain, according to a social policy expert. Furthermore, the official 2026 COLA won’t be revealed until October 2025—many months away.
How can Social Security beneficiaries prepare for the next COLA increase?
We already know that cost-of-living adjustments will be lower in 2026 than in previous years. Retirees should plan for rising health care and housing costs, think about other sources of income, keep up with COLA and SSA updates, and support reforms that base Social Security COLAs on the Consumer Price Index for the Elderly, which more accurately reflects their spending, in order to prevent negative effects from a reduction in Social Security benefits in 2026.
As previously mentioned, COLA adjustments will be lower in 2026 than in prior years. Thus, to prevent negative effects in 2026, beneficiaries should plan for rising health care and housing costs, think about other sources of income, keep up with cost of living adjustments and SSA updates, and support COLA reforms that base Social Security COLAs on the Consumer Price Index for the Elderly, which more accurately reflects their spending.
