Senior Groups Suggest a Better Way to Determine Social Security Cost-of-Living Adjustments

When a 2.8% Social Security cost-of-living adjustment (COLA) was announced in October, there were a lot of unhappy people. In fact, a survey from The Senior Citizens League, a nonpartisan group for seniors, found that just 10% of older Americans were happy with the annual COLA.

The problem with COLAs

The 2.8% increase raises the average retirement benefit by $56 per month. In light of rising food prices, housing, insurance, and utilities, $56 doesn't stretch very far. Factor in the rising cost of Medicare Part B, and most seniors will be lucky to break even.

That's why groups like The Senior Citizens League suggest a new way of calculating COLAs, a method more likely to address the way seniors spend money.

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How COLAs are calculated in 2026

As of April 2025, approximately 74 million Americans receive Social Security benefits. These are benefits they've worked their entire adult lives to earn. Now that they need them, senior groups say there's a good reason they tend to come up short. COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The CPI-W measures price increases faced by urban consumers. While it covers approximately 93% of the population, the CPI-W doesn't address the fact that seniors spend their money differently than younger adults.

For example, seniors spend more on home maintenance, including modifications. They also spend more on travel and can expect to spend a larger share of their income on healthcare, at some point. On the other hand, seniors tend to spend less on clothing, work attire, education, and transportation.

In other words, say senior advocacy groups, the way COLAs are calculated doesn't match up with the reality of how older Americans spend their money and is less likely to help them keep pace with inflation.

What they'd like to see instead

Instead, senior groups and some Democrats in Congress would like to see a bill that changes the current index used for COLAs to the Consumer Price Index for the Elderly, or CPI-E, an index that measures how older Americans spend money. Meanwhile, another group of Democrats has proposed increasing Social Security benefits by $200 per month for six months to help beneficiaries cope with high inflation.

"We want the CPI-E or 3%, whichever one is higher," Shannon Benton, executive director at The Senior Citizens League, told CNBC.

While switching from CPI-W to CPI-E isn't expected to make a huge difference in monthly benefits, every little bit helps when fighting inflation on a fixed income.

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