Bad news is on the way for millions of Americans who rely on Social Security. The 2026 cost-of-living adjustment (COLA) is projected to be 2.7 percent, according to The Senior Citizens League (TSCL). At first glance, you might think any increase is better than nothing. But for many retirees, this small bump could feel like a total loss once higher expenses and health care costs are factored in.
Let us look at why this matters for you, what experts are saying, and what changes could make the system fairer for retirees.
What is the 2026 social security cola projection?
The estimate for the 2026 Social Security COLA sits at 2.7 percent, up slightly from the 2.5 percent increase in 2025.
Keith Speights, a writer for The Motley Fool, put it bluntly: “Unfortunately, next year’s COLA is shaping up to be a lose-lose scenario for retirees.”
The Social Security Administration uses something called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to set these adjustments. But here is the issue—it does not really match the spending habits of seniors.
Recommended:
Why many retirees feel the cola is not enough
You know from your own bills that prices at the grocery store, the pharmacy, and for housing have not stopped climbing. Even with a 2.7 percent boost, many retirees will still struggle to keep up.
Aaron Cirksena, CEO of MDRN Capital, told Newsweek: “It should not matter too much since for most retirees, a 2.7 percent increase barely keeps up with everyday costs. When groceries, housing, and health care keep rising, that extra check may feel helpful in the moment but it does not really change the budget picture.”
To put it simply:
- The average Social Security check might go up by about $54 a month.
- But health care and housing costs often rise far more than that.
- Many retirees are already cutting back on basics like food and medicine just to manage.
Why the CPI-W hurts seniors more than it helps
One of the biggest frustrations is the formula used to calculate COLAs. Right now, it is tied to the CPI-W, which is based on working-age households. But retirees do not spend the same way younger workers do.
Here is what seniors and advocates argue:
- Retirees spend a much larger share of income on health care, prescription drugs, and housing.
- These costs typically rise faster than the CPI-W captures.
- That is why retirees often feel like their COLA increases are always chasing inflation but never catching up.
In a recent TSCL survey of people over 62, 68 percent supported switching to the CPI-E—the Consumer Price Index for the Elderly. This index focuses more on the actual costs seniors face.
Cirksena explained it this way: “It comes down to how COLAs are measured. Seniors spend more on health care and housing, and those costs outpace the inflation numbers almost every year. That is why many retirees feel like COLAs are always playing catch-up.”
Recommended:
Would using the CPI-E make things better?
Switching to CPI-E would likely give seniors higher COLAs over time. Jackson Ruggiero, co-founder of DisabilityGuidance.org, told Newsweek: “Adopting CPI-E would not be perfect (it has sampling and methodological challenges), but it would be a fairer and more accurate reflection of seniors’ cost pressures. It aligns policy with the program’s mission: ensuring that retirement income maintains real purchasing power, especially in areas where seniors feel inflation most acutely.”
In short, CPI-E is not flawless, but it is a step closer to reality for seniors than the current system.
What this means for your monthly budget
If you rely heavily on Social Security, you may already feel like you are being squeezed. The 2.7 percent bump will help on paper, but once higher Medicare premiums and everyday living costs kick in, many of you will not see much difference in your pocket.
Here is the bottom line for retirees:
- Your Social Security “raise” is likely to be swallowed up by inflation.
- Medicare premiums and health care costs could erase most of the increase.
- Unless the formula changes, this problem will keep repeating year after year
Related article:
Social Security Calculator: How much Social Security will I get if I make $230,000 a year?
