Every year the Social Security Administration (SSA) announces the Cost-of-Living Adjustment (COLA) for the next year. The COLA is meant to help retirees keep up with the rising costs of inflation. The COLA for 2026 was confirmed to be 2.8%. This means retirees will see their monthly checks rise by about $56 on average, starting in January.
Even though this may sound like favourable news, there are millions of Americans who note that this does not feel like much of a raise. The reason for this is because the cost of food, utilities and healthcare continues to increase and many retirees are concerned that the increase won’t go far enough. Many believe that the way the COLA is calculated, is incorrect and does not reflect the true spending pattern of retirees.
What the 2.8% Increase Means
The COLA designed to help retirees keep up with the rising costs of inflation.
For 2026, the COLA increase will be 2.8%, based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
That means:
- The average monthly benefit will increase from about $2,000 to roughly $2,056.
Yes, every bit counts but retirees are concerned that the increase does not really keep up with the prices of food, healthcare and rent, as these go up faster than benefit increases.
Why the COLA Formula Doesn’t Work for Seniors
The problem comes in with the way that COLA is calculated. The CPI-W index is based on working class Americans and not retirees.
This is important because the elderly population spend their money very differently, they spend more on healthcare, housing and prescriptions.
The CPI-W does not reflect the true spending pattern the elderly population, rather it focuses more on the spending pattern of working-class individuals. As a result of this, when Social Security benefits increase, it isn’t sufficient enough to cover the actual cost of living.
Your Check Doesn’t Buy What It Used To
According to advocacy groups like The Senior Citizens League (TSCL), Social Security benefits have lost about 20% of their purchasing power since 2010.
What this means is that what $100 could buy in 2010, now costs approximately $120. The sad part is that your Social Security benefit hasn’t increased enough to make a difference.
A Better Way: The CPI-E Proposal
There are many officials who are pushing for COLA to be calculated using a different index, that is the Consumer Price Index for the Elderly (CPI-E). This reflects the true spending pattern of elder Americans and would present a much more accurate COLA.
Only when this change happens, then will retirees see fair adjustments that actually keep up with their spending patterns.
How the 2.8% Raise Affects You
As of January 2026, your Social Security check will be increased by 2.8%, however some retirees may not see much of it. The reason for this is because Medicare premiums are automatically deducted from your Social Security benefit, and Medicare premiums are expected to increase next year as well. This will eat into the increase.
In other words, that extra $56 a month could easily disappear before you even notice it.
The Bottom Line
As much as the 2.8% COLA for 2026 might seem like good news, for many retirees, it might just not be enough. The formula used to calculate the COLA does not reflect the accurate spending pattern of retirees.
Because of that, Social Security checks today buy about 20% less than they did in 2010. Even though Social Security exists to help retirees financially, retirees must plan and look into other savings and investment options. Relying solely on Social Security is not the best options especially a time where the cost of living is constantly increasing.