Social Security’s 2026 cost-of-living adjustment (COLA) is projected to increase by 2.4%, according to estimates from The Senior Citizens League (TSCL) and independent policy analyst Mary Johnson.
This would mark the smallest increase since the 1.3% rise in 2021 and reflects a growing disconnect between benefit increases and the real-world costs retirees face. Even while inflation from pandemic levels has moderated, retirees continue to face ongoing financial strain from escalating healthcare expenses, tariffs, and lackluster benefit growth. This article outlines what’s driving the 2026 COLA, how it’s calculated, and why experts warn it may worsen financial insecurity for millions of retirees.
How the COLA calculation leaves seniors behind
The COLA is determined by comparing third-quarter averages of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of inflation in households that derive at least 50% of income from clerical or wage-earning jobs. While the CPI-W rose 2.1% per year through April 2025, critics say it fails to factor in seniors’ unique spending patterns, like healthcare, which represents 15% of elderly spending versus 8% for younger labor.
The CPI-W’s allocation for medical care (6.5%) and prescription drugs (1.3%) in its index underestimates real costs. For example, TSCL’s 2025 survey found that 20% of retirees spend over $1,000 a month on healthcare—a little less than half of the average Social Security benefit of $1,907. This built-in imbalance causes COLAs to lag behind rising costs over time, slowly eroding purchasing power.
Historical context: A decade of inadequate adjustments
Over the past 10 years, COLAs have averaged 2.75%, skewed upward by 2022’s 5.9% and 2023’s 8.7% spikes during post-pandemic inflation. However, these outliers mask a trend of insufficient adjustments. Since 2010, Social Security benefits have lost 36% of their purchasing power due to cumulative COLA deficits.
| Year | COLA | Inflation Rate | Purchasing Power Loss |
| 2021 | 1.3% | 7.0% | -5.7% |
| 2023 | 8.7% | 6.5% | +2.2% |
| 2025 | 2.5% | 3.1% | -0.6% |
| 2026 | 2.4% | 2.7%* | -0.3%* |
*Projected
The above chart illustrates how COLAs fall behind real inflation, imposing a “retirement penalty” on retirees who depend on Social Security.
Expert alarms: “A recipe for poverty”
Financial experts and advocacy organizations alike are sounding the alarm over the 2026 projection:
- Shannon Benton (TSCL): “A 2.4% COLA exposes millions to the specter of poverty. Seniors can’t swallow another year of their benefits trailing behind their expenses.”
- Mary Johnson: “The CPI-W doesn’t accurately represent reality for seniors. Unless we apply the CPI-Elderly index, COLAs will continue to fall short.”
TSCL research indicates 73% of seniors depend on Social Security to generate half or more of their income, 39% depend solely on it. For these households, a 2.4% increase (some $46/month to the average beneficiary) is overwhelmed by anticipated Medicare Part B premium increases of $15-$25/month.
Surviving the shortfall: Strategies for retirees
While reform at the system level is required, experts recommend immediate action to address the COLA shortfall:
- Delay claiming benefits: Delaying Social Security until age 70 boosts payments by 8% annually, which will provide protection against inadequate COLAs in the long term.
- Add supplemental income: Part-time work or subletting unused home space can help make up the shortfall.
- Advocate for CPI-E implementation: CPI-Elderly, which gives increased weight to healthcare and housing, has been suggested in Congress as a mechanism to reform COLA computations.
Read more: Do I automatically get Medicare Part A and Part B when I turn 65?
Read more: What services does Medicare Part A cover, what are the costs and what is the eligibility?
