The 2026 Social Security COLA Is a No-Win Situation for Retirees

Key Points

• The 2026 cost-of-living adjustment will be announced in October.

• The news won't be good for retirees, no matter what happens.

• Seniors will either get a small raise or be coping with big price increases.

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

In 2026, seniors who collect Social Security benefits are on track to get a cost-of-living adjustment (COLA).

COLAs are built into the Social Security benefits program, and they happen automatically, so this isn't a surprise. In fact, many retirees are eagerly awaiting news of how big their benefits bump will be, as the official announcement on the COLA size will be made in October.

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Unfortunately, the sad reality is that the 2026 COLA is actually going to be a no-win situation for seniors. No matter what, the COLA is likely to disappoint and leave seniors feeling more financially vulnerable.

Here's why that's the case.

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The 2026 COLA is not going to make seniors happy

It may seem hard to believe a benefits increase could be a no-win situation, but here's the problem. One of two things is going to happen with your cost-of-living adjustment:

1. It's going to be smaller than it has been in recent years, leaving you disappointed with a lower benefits increase than you may have expected or hoped for;
2. It's going to be larger than it has been in recent years, which will happen only if inflation is surging. High levels of inflation are not good for seniors because you likely have money in retirement plans that may be invested relatively conservatively and may not keep pace with inflation.

In the last few years, seniors have seen very large cost-of-living adjustments to their Social Security benefits. In fact, the 2022 COLA was 5.9% and the 2023 COLA was 8.7%. In 2024, seniors saw a benefits increase of 3.2% and this year, the benefits bump was 2.5%. Those large COLAs have happened because of record-high inflation in the post-pandemic era.

If the COLA comes in smaller, seniors who have gotten used to such a large increase are going to be upset. Of course, right now, that's not terribly likely, as current estimates suggest a 2.7% COLA is probably. So, seniors won't face this disappointment.

The problem is that if that prediction pans out and seniors get a 2.7% raise, that's happening only because of persistently high inflation. A 2.7% raise means inflation is well above the Federal Reserve's 2.00% target. Prices have kept going up, and that's not great because it means the money in your 401(k) and other plans won't buy as much. Any money in savings, an IRA, or other investment accounts could lose ground.

Retirees need to be sure they have a solid financial plan

Many retirees have been struggling in recent years due to the economic impact of post-COVID inflation, and now tariffs are also causing price increases that are hurting seniors.

A COLA is not going to solve this problem, particularly since experts suggest that the COLA underestimates the raise retirees need to avoid losing buying power because of the way the benefits formula works.

You need to have a solid financial plan if you are a retiree coping with these turbulent economic times -- and that means living on a budget, being mindful of your spending, and avoiding withdrawing too much too soon from your retirement accounts.

No matter what your COLA is next year, following these basic steps will be key to a secure future.

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