Retirees Fear Social Security's 2026 Cost-of-Living Adjustment Won't Be Enough to Blunt the Impact of Inflation

Key Points

• Experts estimate 2026’s cost-of-living adjustment (COLA) will be 2.7% to 2.8%.

• Chances are that current inflation will eat into the average retiree’s COLA.

• In addition to using the COLA to pay for the higher cost of living, retirees may have to employ some inflation-fighting techniques of their own.

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

The Social Security Administration bases upcoming cost-of-living adjustments on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). And if you think, "Wow, the latest COLA sure doesn't seem to be in line with the inflation I'm experiencing in real life," you're not alone. It could be because the CPI has increased dramatically since the pandemic arrived in 2020. Layering one year of inflation on top of another adds up fast.

Perhaps it's no surprise that some retirees are concerned that their 2026 COLA won't be enough to soften the impact real-life inflation has on their budget. The 12th edition of the Nationwide Retirement Institute's Social Security survey gives us a peek into what people are thinking.

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What's on retirees' minds

Personal finances

• 50% fear President Trump's tariff changes will negatively impact their retirement income or savings.
• 63% believe rising tariffs will drive inflation beyond what a COLA can cover.
• 61% claim that missing half a Social Security payment would leave them unable to survive financially.
• 55% say their monthly Social Security benefits don't cover their basic needs.
• 52% of respondents say they've been cutting back on discretionary spending.
• 31% admit to reducing essential expenses.
• 31% find themselves dipping more into their savings or retirement accounts.

According to Tina Ambrozy, head of strategic customer solutions at Nationwide, the long-term impact of the new U.S. trade policy is difficult to predict. With inflation on the rise and new tariffs adding uncertainty, this year's survey found more Americans worried about the state of Social Security and whether it can support them in retirement.

The Nationwide survey illustrated how many Americans are just one disruption away from a serious financial issue.

The future of Social Security

According to the survey, Americans are concerned across the broader population. Nationwide describes the responses as "widespread and deeply felt." For example:

• 83% of those surveyed express concern about the long-term viability of Social Security.
• 74% worry that Social Security will run out of funding during their lifetime.
• Among younger generations, skepticism is even more pointed: 38% of Gen Z (ages 18-28) and 34% of millennials (ages 29-44) believe they might spend their entire career paying into Social Security but won't receive a single cent they've earned.

Magical thinking?

The idiom "A little knowledge is a dangerous thing" may be appropriate regarding Social Security.

• The survey found that most Americans (74%) believe they can handle their Social Security benefits without the help of a financial professional. However, only 38% claim to be confident in their knowledge of how the program works.
• When asked, only 21% of all respondents could correctly identify full retirement age, the age at which they can collect full Social Security benefits.
• When faced with 15 true-or-false questions about the program, the average respondent was able to answer eight correctly.
• 73% say they need to learn about how Social Security is taxed.
• 54% of respondents admit to not accounting for the impact of taxes on their retirement income.
• 58% claim they're concerned about how taxes could affect their financial futures.
• Further, 19% of current Social Security recipients say it's become more difficult to access or manage their benefits this year. Nationwide views it as a system that has become increasingly complex to navigate without professional assistance.

So, there you have it. If you've been more anxious than normal about Social Security of late, it may have to do with more than one issue. You're never too old (or young) to reach out to a financial or retirement planner who can help you sort through your Social Security questions and develop a surefire withdrawal strategy for retirement.

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