The 2026 Social Security COLA is insufficient to cover the needs of seniors and others who rely on these earned benefits. Seniors Guide writer Kari Smith explains.
On Oct. 24, 2025, the Social Security Administration (SSA) announced that the 2026 cost-of-living adjustment (COLA) for Social Security benefits will be 2.8%. On paper, that might sound like good news for America’s retirees, since it’s an increase from the 2.5% adjustment granted in 2025. But in reality, this modest bump will barely make a dent in the mounting costs that older Americans face. For millions of retirees who depend on Social Security as their primary or partial source of income, the 2026 COLA is far from sufficient to ensure financial stability.
According to the SSA, the average retired worker will see their monthly check increase by $56, starting Jan. 1, 2026. Historically, the 2.8% adjustment ranks around the middle of the pack, 29th out of the 51 COLAs issued since annual increases were first tied to the Consumer Price Index (CPI) in 1975. Over the last decade alone, the COLA increase has averaged about 3.1%.
While that might make the 2026 COLA seem average, the reality is that “average” is not enough for seniors struggling to afford basic essentials – especially those costs especially essential to them. As The Senior Citizens League (TSCL) reports, about 73% of older Americans rely on Social Security for more than half of their income. Roughly 39% depend entirely on these benefits to survive. They estimate that the average senior lives on less than $2,000 per month, which is barely above the poverty line in many parts of the country.
2026 Social Security COLA is insufficient, hitting seniors where it hurts
Unfortunately, inflation remains high in categories where seniors often spend the most: housing, health care, and insurance. Gary Schlossberg, a global strategist with the Wells Fargo Investment Institute, told AARP that older adults spend much more of their budgets on these essentials than younger workers do and that inflation in both housing and medical care has been running higher than the overall inflation rate.
Rising health care and Medicare costs
One of the most immediate threats to retirees’ financial state in 2026 is the expected rise in Medicare costs.
Kiplinger Financial noted that major insurers are scaling back on Medicare Advantage and Par D for 2026. Their decision is a response to financial pressures such as changes to government funding and rising healthcare costs, leading them to trim their offerings.
The National Council on Aging (NCOA) warns that Medicare premiums and deductibles are projected to increase by 4% to 12%, meaning the entire COLA will be consumed by rising health care expenses.
NCOA President and CEO Ramsey Alwin put it bluntly: “COLA might reflect the inflation rate, but it is woefully insufficient for older Americans who already have high health care costs and are facing even greater increases in their Medicare costs in 2026. Once again, older adults will have to make heart-wrenching decisions about whether to spend their fixed incomes on health care, food, or housing.”
These trade-offs sadly impact health and longevity. NCOA’s research, in partnership with the LeadingAge LTSS Center at UMass Boston, found that adults over 60 earning $20,000 or less annually die nine years earlier on average than those earning $120,000 or more. As Alwin emphasized, the poverty rate for people over age 65 and older grew to 15% in 2024 – and they were the only age group to experience an increase. The implications are sad: millions of Americans who worked and contributed for decades are now aging into financial hardship.
Related: How the 2025 budget and spending bill affects nursing homes
Frustration among seniors
The Seniors League reports that 94% of seniors believed last year’s 2.5% COLA was too low, and only 10% say they are satisfied with their current Social Security benefits. The group’s executive director, Shannon Benton, warns that the 2026 adjustment “is going to hurt for seniors. Year after year, they warn that Social Security’s meager increases will not be enough, and the Census Bureau estimates that about 10% of retirement-age Americans live in poverty. However, our research suggests that the number may be higher.”
Part of the problem lies not only in the size of the COLA but in how it is calculated. The government bases annual adjustments on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). While the CPI-W tracks inflation for working-age households, it does not accurately reflect the spending patterns of retirees, who devote a much higher share of their budgets to medical costs, housing, and utilities.
Advocates have long argued for replacing the CPI-W with the Consumer Price Index for the Elderly (CPI-E), which is specifically designed to measure inflation affecting older Americans. TSCL notes that the CPI-E has been higher than the CPI-W about 69% of the time, meaning that seniors have lost thousands of dollars in benefits over the years due to the current formula. As Benton puts it, “It is about time our elected representatives show up for seniors, or else seniors will not show up for them at the voting booth.”
Calling for COLA reform
Seniors’ groups are urging Congress to take swift action to strengthen and modernize the way Social Security benefits are adjusted. TSCL has called for a minimum COLA of 3% to ensure that benefits keep pace with basic living expenses, along with an immediate switch to using the CPI-E. Both measures, advocates argue, would provide fairer protection against inflation for retirees who have little flexibility in their budgets.
How COLA is determined may seem like an obscure policy issue, but it has heavy, real-world consequences. Over time, even small differences in annual adjustments can accumulate into large shortfalls. A senior living on $2,000 a month today who receives COLAs that lag behind true inflation by just one percentage point annually could lose tens of thousands of dollars in purchasing power over a 20-year retirement.
Meanwhile, broader economic forces are making retirement less affordable. Rising housing costs, escalating insurance premiums, and high out-of-pocket medical expenses are squeezing older adults’ already thin margins. Many who once believed they had saved enough for retirement are now being forced to dip into limited savings, rely on family, or even return to work.
A growing sense of urgency
Both NCOA and TSCL agree on one point: the current system is not working for the people it is supposed to serve. As the senior population grows – expected to reach 80 million Americans by 2040 – the inadequacy of the COLA becomes not just an individual hardship but a national concern.
The 2026 Social Security COLA may be statistically average, but for millions of retirees, it is painfully inadequate. With the costs of housing, insurance, and especially health care rising faster than general inflation, a 2.8% increase simply does not keep pace with the true cost of living for older Americans. As long as COLAs are tied to an index that does not reflect seniors’ needs, Social Security will continue to fall short of its promise to protect Americans from poverty in old age.
The 2026 Social Security COLA is insufficient. Without significant reform, seniors’ daily expenses will continue to rise faster than inflation, increasing the hardship for those who can least afford it.
