Retirees depend on Social Security Cost of Living Adjustments because these benefit increases help ensure checks go up as inflation rises. While COLAs don’t happen every year, they have been higher-than-average in the post-pandemic era. In fact, in 2026, retirees got a 2.8% COLA, which was higher than the 2.5% benefits increase in 2025.
Unfortunately, even though the 2.8% COLA was reasonably generous this year, it’s actually losing value already. And there is a good chance that retirees are going to end up worse off this year than they were last year. Here’s why that’s the case.
Why the 2026 COLA doesn’t measure up
Retirees are facing the same problem with the cost-of-living increase in 2026 as they do in most years. The benefits increase is supposed to make sure they maintain buying power by giving them additional benefits that cover the higher costs they incur over time as prices rise.
Unfortunately, the COLA generally doesn’t do that. In fact, the Senior Citizens League, a senior advocacy group, has repeatedly warned that COLAs are not keeping up with the actual inflation seniors are experiencing. This has led to a 20% loss in buying power since 2010, and that trend is going to continue.
This is happening due to the method of calculating Cost of Living Adjustments. Specifically, COLAs are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) instead of using a price index that is designed to match the spending habits of the elderly. And, urban wage earners and clerical workers simply don’t spend the same amount of money as retirees do on things like healthcare and housing.
This becomes a big problem because of the fact that the areas where retirees tend to concentrate their spending tend to be areas where costs increase much faster than the overall rate of inflation. Since the COLA undercounts how much spending is going up on the things that matter to seniors, it does not provide enough extra money each year to make up for the extra costs retirees have to pay.
This troubling trend has continued in 2026
The troubling trend of inadequate COLAs is continuing in 2026. In fact, if you look at just one cost seniors are experiencing, you can see why the COLAs often fall so short.
In 2025, Medicare premiums cost $185, but in 2026, they cost $202.90. That’s a $17.90 increase, and it means that the cost of premiums increased by close to 10%. But, retirees only get a 2.8% COLA. Since Medicare premiums come right out of Social Security checks sent to retirees 65 and up who are covered by this government insurance program, the higher premium payments directly reduce the impact COLAs have on their benefit deposit — and thus on their spending power.
With many experts warning that Medicare premiums are going to continue increasing at a faster pace than Social Security benefits, retirees are going to end up spending an ever-increasing portion of their limited Social Security payments to make sure they can get healthcare. But, of course, they’ll have other cost increases to contend with as well.
Retirees can do little about this problem, other than to make sure that they are saving as much as they can to supplement Social Security so they have funds coming from their retirement accounts to pay for things their retirement benefits don’t stretch far enough to cover.
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