Current predictions are that the 2026 Social Security Cost-of-Living Adjustment, or COLA, will provide a relatively small 2.4% boost, the lowest increase since 2021, which has the possibility of giving millions of baby boomers with increasing economic insecurity. The 2.4% prediction comes from Senior Citizens League (TSCL), an advocacy group.
Critics argue that the increase, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), does not fully take into consideration seniors’ increased health care and housing costs, increasing at close to double the overall rate of inflation. With 34% of retirees heavily reliant on Social Security and 57% surviving on less than $2,000 a month after deductions, the 2026 adjustment risks pushing many into irreversible economic decline.
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Healthcare costs: The budgetary black hole
For the typical retiree making $1,980 a month, a 2.4% COLA would translate to a $47.52 boost, a number that pales in comparison to the surging medical expenses many retirees are facing. TSCL indicates 20% of seniors use more than $1,000 a month on medical expenses, such as Medicare premiums, out-of-pocket services such as dental work, and prescription medications. At the same time, Medicare Part B premiums will increase 6% in 2026, costing $568 per year and wiping out 12 months of COLA gains.
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The contrast between CPI-W and medical inflation is stark: as overall inflation creeps to 2.6%, medical expenses continue at 4.1% per year. Retired couples will spend $275,000 on lifetime out-of-pocket health care, a toll exacerbated by chronic illnesses like diabetes and high blood pressure that plague 60% of boomers. “Seniors are skipping medications and doctor visits to purchase food,” warns TSCL’s Shannon Benton, underscoring the human toll of what critics say is a flawed calculation.
Housing: The invisible crisis propelling elder poverty
Housing now represents the largest monthly expense for 31% of retired households, with 11.2 million older Americans classified as “cost-burdened” (spending more than 30% of their income on housing). Median rents for seniors have risen 18% since 2021—outpacing COLAs by more than six percentage points. In high-cost areas like Washington, D.C., retirees such as Leslie McIntire face over three-year waits for subsidized housing. Many, after decades-long professional careers, are turning to shelters.
Once a pillar of retirement stability, homeownership now offers diminishing protection. Nearly 40% of older adults carry mortgage debt—up 250% since 2000—with balances averaging over $100,000. Black retirees are hit especially hard: 45% are renters, and Black homeowners hold 35% less equity than their white peers, leaving them with less to cover rising costs.
Policy paralysis and the road to reform
TSCL estimates that if the COLA were calculated using the CPI-E index, the 2026 increase would be 3.1%—equivalent to $61.38 per month, compared to the current $47.52. Without such adjustments, the looming 2033 depletion of the Social Security Trust Fund could trigger benefit cuts exceeding 20%—a scenario experts describe as catastrophic for millions of older Americans.
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