Social Security's 2026 Cost-of-Living Adjustment (COLA) Could Deal Retirees a Blow No Matter What. Here's Why.

Key Points

• Recent estimates are calling for a 2026 Social Security cost-of-living adjustment (COLA) of 2.7%.

• A 2.7% raise may not help seniors keep up with rising costs.

• A larger boost than that will mean that inflation is ticking upward, hurting consumers' wallets across the board.

• The $23,760 Social Security bonus most retirees completely overlook ›

There are millions of seniors who collect a monthly benefit from Social Security. And if you're one of them, you may be itching to find out what 2026's cost-of-living adjustment (COLA) will amount to.

Unfortunately, you'll have to sit tight a bit longer. The Social Security Administration cannot make its upcoming COLA official until it has inflation data from September. For this reason, an announcement won't be made until mid-October.

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Still, there are some estimates on next year's Social Security COLA you can turn to for now. The nonpartisan Senior Citizens League, an advocacy group, is projecting that next year's Social Security COLA will be 2.7% based on the most recent inflation readings to date.

There's a chance, though, that next year's COLA could end up being even higher. But that's not necessarily a good thing for Social Security recipients.

Why 2026's COLA will be bad news no matter what

The reason 2026's Social Security COLA is truly a lose-lose scenario for seniors boils down to the way those raises are calculated and what they're meant to do. Social Security COLAs are based on year-over-year changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That itself is problematic because the CPI-W is not particularly reflective of the costs seniors face.

Still, the CPI-W measures inflation as a whole. And a 2.7% COLA is an indication that inflation hasn't risen so substantially.

That's a good thing in theory, except that a 2.7% raise is an increase many seniors won't be happy with. A lot of people on Social Security want more out of their COLAs so they're able to gain buying power. But that's not what COLAs are meant to do.

The purpose of COLAs isn't to help seniors on Social Security get ahead financially -- it's to help them keep up. Expecting anything more than that could mean setting yourself up for disappointment.

Of course, that 2.7% projection isn't set in stone. But even if 2026's Social Security COLA comes in higher, that, too, will be bad news. The reason? It'll be an indication that inflation started ticking upward, hurting consumers across the board.

When it comes to COLAs, there's no way to win

Either way you look at it, Social Security recipients face a real blow in 2026. They're either going to get only a modest COLA or they're going to get a larger COLA that comes at the cost of more drastic price increases.

For this reason, if you're on Social Security and are banking on a generous COLA to improve your financial outlook in the new year, you'll need to stop doing that. Instead, take steps to improve your financial situation.

Those could include:

• Trimming expenses in your budget.
• Downsizing to a less expensive home.
• Moving to a less expensive city or state.
• Working part-time to boost your retirement paycheck.
• Giving your investment portfolio a checkup to make sure it's generating as much income as it could be.

Although an official COLA announcement should arrive soon enough, either way, the number probably won't be one to get excited about. The sooner you recognize that, the sooner you can take steps to make a real difference in your retirement finances.

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