The 2026 Social Security Cost-of-Living Adjustment (COLA)
The anticipated Social Security Cost-of-Living Adjustment (COLA) for 2026 is set at 2.4%, representing the smallest annual increase since 2021.
This relatively low adjustment has sparked concern among older adults who rely on Social Security as a primary source of income to meet their basic needs.
The expected rise follows a 2.5% increase in 2025 and falls well below the larger adjustments of 5.9% in 2022 and 8.7% in 2023.
Understanding COLA and Its Impact
The Cost-of-Living Adjustment, commonly referred to as COLA, is a yearly change made to Social Security payments to help beneficiaries keep up with inflation.
This adjustment is determined by tracking the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which reflects shifts in the cost of everyday goods and services.
While COLA’s purpose is to maintain the purchasing power of benefits, critics argue that the CPI-W does not align with seniors’ actual spending—particularly in categories like medical care, housing, and food, where prices often rise faster than average.
Historical COLA Adjustments
Here is a breakdown of recent COLA percentages for context:
| Year | COLA Increase |
|---|---|
| 2021 | 1.3% |
| 2022 | 5.9% |
| 2023 | 8.7% |
| 2024 | 3.2% |
| 2025 | 2.5% |
| 2026 | 2.4% (projected) |
Source: Social Security Administration
The projected 2.4% increase for 2026 falls short of the average COLA over the past two decades, which is around 2.6%. This shortfall may further erode the real value of Social Security benefits over time.
Seniors’ Financial Concerns
According to a poll by The Senior Citizens League (TSCL), 94% of participants felt the 2.5% COLA in 2025 was not enough. About 73% of those surveyed depend on Social Security for half or more of their income, and 39% rely on it entirely.
Additionally, 1 in 5 seniors reported spending at least $1,000 a month on healthcare expenses, while 57% said their monthly income is less than $2,000, highlighting the severe financial challenges many retirees face.
Policy Responses and Recommendations
In an attempt to lower prescription medication costs, former President Donald Trump issued an executive order aimed at aligning U.S. drug prices with international rates.
However, experts argue that the order falls short because it doesn’t allow Medicare to directly negotiate drug prices with manufacturers.
Advocacy organizations like TSCL have urged lawmakers to revise the method used to calculate COLA. They propose using the Consumer Price Index for the Elderly (CPI-E), which better represents the typical spending patterns of older Americans.
The 2.4% projected adjustment for 2026 emphasizes the continued financial pressure on seniors trying to cope with rising living expenses. Without changes to the current formula, many retirees may find it harder to stay financially stable.
FAQs
What is the projected COLA for 2026?
The Cost-of-Living Adjustment for Social Security in 2026 is expected to be 2.4%, the smallest increase since 2021.
How is the COLA calculated?
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), comparing inflation levels from the third quarter of the previous year to the same period in the current year.
Why do seniors believe the COLA is insufficient?
Many older adults feel the COLA does not accurately reflect real inflation, especially in essential areas like housing, medical care, and groceries. This mismatch reduces the real buying power of their benefits.
Janice R. Phillips is a seasoned finance writer with a keen eye for simplifying complex financial concepts. With over a decade of experience covering personal finance, investing, and economic trends, she empowers readers to make informed money decisions. Janice specializes in creating content that bridges the gap between financial theory and real-world application, making her a trusted voice for both novice and experienced investors.