Millions of retirees in the United States closely await an announcement that arrives every October: the annual Social Security increase. This increase, called COLA (cost-of-living adjustment), aims to keep payments in line with inflation. However, what is expected for 2026 doesn't promise much relief.
What is COLA and why does it matter
The COLA is an adjustment made by the Social Security Administration every year. It is calculated using the Consumer Price Index (CPI-W), which measures how prices of goods and services change.
The idea is simple: if everything gets more expensive, benefits go up a bit. So, if you receive $1,500 today and the COLA is 2%, next year you'll get $1,530.
But the problem is that if inflation rises just as much or more, that extra money won't let you buy more, it will only keep you afloat.
2025 left a bitter taste
In October 2024, it was announced that the COLA for 2025 would be 2.5%, one of the lowest in recent years. Many retirees received it with concern.
The reason is simple: with high prices for food, rent, and medicine, the increase didn't cover expenses. In practice, it was more of a psychological relief than a real change in the wallet.
This scenario put a harsh reality on the table: COLA doesn't always fully protect against the loss of purchasing power.
What to expect in 2026
Forecasts point to a COLA of 2.6% for 2026, according to calculations by the Senior Citizens League. This would be just a bit more than in 2025.
The calculation is based on the most recent CPI-W data, which in June showed an increase of 2.6%. However, the final figure won't arrive until October 2025, when third-quarter numbers are analyzed.
Although any increase is welcome, a 2.6% rise wouldn't represent a substantial change if inflation remains present. It would be more of an adjustment to avoid falling behind, not to improve.
How to prepare for this outlook
While COLA is important, it's not the only tool to keep financial stability. Experts advise retirees to:
- Plan expenses: review the budget and prioritize essentials.
- Look for housing alternatives: move to areas with a lower cost of living.
- Generate extra income: part-time jobs, private lessons, or online services.
- Take advantage of benefits: senior discounts at supermarkets, transportation, and activities.
In summary, the 2026 COLA probably won't bring major changes for retirees. The key is to make personal decisions to protect your wallet. It's not wise to depend only on an adjustment that barely keeps up with inflation.