After a modest increase for 2025, Social Security recipients could see a slightly more generous cost-of-living adjustment (COLA) in 2026. Early projections suggest a 2.7% rise, compared to the 2.5% granted this year. These estimates, highlighted by AOL and based on data from the Senior Citizens League, reflect ongoing trends in consumer prices.
The adjustment is tied to the third-quarter performance of the Consumer Price Index for Urban Wage Earners and Clerical Workers. While COLAs are designed to account for inflation, the numbers alone do not always convey the broader implications for retirees’ income and day-to-day expenses.
From Congress Votes to Automatic Increases
There was a time when Social Security benefits didn’t increase unless Congress voted to make it happen. Prior to 1975, retirees had no guarantee that their payments would keep pace with inflation.
That changed when automatic COLAs were introduced. Since then, benefits have been adjusted each year in line with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Specifically, the July through September CPI-W average of each year determines the adjustment for the following year.
This automation has shielded retirees from total erosion of purchasing power. But it has also made many of them reliant on those yearly increases just to stay afloat.
Inflation Triggers Higher Cola — And Higher Costs
The projected 2.7% COLA for 2026 may look like an improvement over 2025’s 2.5%, but it’s important to note what it really reflects: higher living expenses across the board.
And recent data shows that broad inflation has already outpaced the 2.5% COLA, especially in essential categories like food, fuel, and housing. So even with this year’s increase, many seniors are already finding it harder to keep up. In fact, the Senior Citizens League has reported that price increases in recent months have effectively eroded the purchasing power of Social Security checks.
In other words, a higher COLA is not a win — it’s a warning sign.
Social Security Alone Won’t Keep Up
Many retirees have little room to cut back further. Essentials make up the bulk of their spending, and while relocating to a less expensive area might help in theory, it often means leaving behind family or medical support.
In some cases, returning to the workforce becomes the only practical option. Part-time or flexible work may help offset rising costs, but it’s not realistic — or fair — to expect this from everyone.
That’s why understanding how Social Security COLAs work is important, especially for those still planning their retirement.
Planning Beyond Government Formulas
For today’s workers, the lesson is clear: even automatic COLAs won’t guarantee a comfortable retirement. Social Security is not designed to be your only source of income, especially over a 20- or 30-year retirement horizon.
Building additional savings through 401(k)s, IRAs, or other investments remains critical. Even modest personal savings can act as a cushion when inflation picks up faster than government formulas can adjust for it.
Little-Known Ways to Boost Benefits
Surprisingly, many Americans are leaving money on the table. According to some financial strategists, simply optimizing your Social Security claiming strategy could boost retirement income by as much as $23,760 per year.
This isn’t a gimmick — it’s about understanding the system. For instance, delaying benefits past full retirement age earns delayed retirement credits, which can substantially increase monthly payments.
There are also spousal benefits, survivor strategies, and specific rules that, if used correctly, could lead to significantly higher lifetime payouts. These methods aren’t widely known, but they’re fully legal and already built into the system.
One financial platform, Stock Advisor, claims to offer detailed insights into these techniques. While not for everyone, such tools may help retirees make the most of their Social Security.
