Beneficiaries of Social Security and Supplemental Security Income are awaiting news on the upcoming increase in their benefits for the year 2026, with the announcement now scheduled for Friday. This delay, prompted by a recent federal government shutdown, has left nearly 75 million recipients eager for clarity regarding the cost-of-living adjustment (COLA) that will be reflected in their January checks.
Experts project that the COLA for 2026 could be between 2.7% and 2.8%, based on the latest consumer price index data. While this figure aligns with historical averages, many retirees and beneficiaries are expressing concerns that the adjustment will not adequately address the rising costs of living. Kathryn Bailey, a 74-year-old retired oncology researcher from Washington, D.C., articulated the frustration felt by many, stating, “I just wish it would be more.” She recalled the significant increase of 8.7% instituted in 2023, which was aimed at addressing post-pandemic inflation. Despite that substantial bump leading to an approximate $135 monthly increase, Bailey remarked that it barely made a difference, citing escalating expenses in healthcare, housing, and food.
As the anticipated increase for 2026 is projected to add roughly $54 to the average monthly retirement benefit check, many are highlighting the disparity between their living costs and the COLA. Over the past two decades, the average annual COLA has been around 2.6%, according to The Senior Citizens League, indicating a trend where retirees’ expenses have consistently outpaced the adjustments they receive. Research from Goldman Sachs Asset Management further underscores this issue, showing that costs for retirees grew at a 3.6% annual rate from 2000 to 2023, while the consumer price index increased by only 2.6%.
Despite the current inflation rate being lower than the peak seen after the pandemic, certain costs—particularly in energy, vehicle maintenance, and insurance—have risen significantly. Experts like David Freitag, a financial planning consultant at MassMutual, assert that while the COLA may not fully correspond to economic changes, it remains a crucial protective measure for beneficiaries, offering a “20% lift over four years” that can profoundly impact their financial well-being.
The COLA adjustment is integral for ensuring that Social Security income keeps pace with inflation. Yet, issues persist; according to AARP CEO Dr. Myechia Minter-Jordan, even with the COLA, a staggering 77% of older adults face difficulties meeting basic living expenses, revealing a systemic challenge within retirement funding.
In light of these concerns, advocacy groups like The Senior Citizens League have made calls for a reevaluation of how the COLA is computed. One proposed change is shifting from the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E), which would better reflect the spending habits of older adults, particularly in sectors like healthcare and housing.
Other proposals suggest adopting the Chained CPI, which allows for consumer behavior adjustments in response to price changes. However, experts caution that such a change could potentially diminish future COLAs, affecting the overall solvency of the Social Security trust funds projected to deplete by 2034.
With discussions around limiting COLA sizes for higher earners also on the table, many beneficiaries, including Bailey, advocate for an adjustment method that more accurately mirrors the rising costs they face. “I wish they would sit down and consider the percentage of things that have gone up,” she stated, emphasizing a desire for a reassessment of how these critical adjustments are formulated.
