The 2026 Social Security cost-of-living adjustment (COLA) is projected to be 2.7 percent, according to the latest estimate from advocacy group The Senior Citizens League (TSCL). But the increase, while intended to offset inflation, may not be enough to keep pace with the rising costs that retirees face.
“Unfortunately, next year’s COLA is shaping up to be a lose-lose scenario for retirees” said Keith Speights, writer for financial website The Motley Fool.
The Social Security Administration (SSA) calculates COLAs using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index reflects the spending habits of younger, urban workers rather than retirees. Since 1975, COLAs have been set annually using CPI-W data from July through September, with the goal of keeping benefits in line with rising costs for housing, food, and medical care.
The overall CPI rose 2.7 percent in July on an annual basis, according to the Bureau of Labor Statistics. This is in line with the most recent estimate from the TSCL, which puts the COLA for next year at 2.7 percent, which is “higher than this year’s increase of 2.5 percent,” Speights said. “That might sound like good news to many retirees, but the COLA might not be enough to offset the corrosive effect of inflation on their Social Security benefits.”
Retirement and benefit experts agree that the projected 2.7 percent adjustment is unlikely to significantly ease pressure on household budgets.
“It shouldn’t matter too much since for most retirees, a 2.7 percent increase barely keeps up with everyday costs” Aaron Cirksena, founder and CEO of retirement planning firm MDRN Capital, told Newsweek. “When groceries, housing, and health care keep rising, that extra check may feel helpful in the moment but it doesn’t really change the budget picture.”
Seniors Against CPI-W
Many seniors and advocates argue that CPI-W does not accurately capture the expenses that weigh most heavily on retirees. In TSCL’s latest survey of 1,192 individuals over the age of 62, about a third (34 percent) identified updating the COLA formula as their top policy priority for enhancing Social Security benefits.
The survey found that 68 percent of seniors support replacing the CPI-W with the Consumer Price Index for the Elderly (CPI-E), which measures inflation based on the spending habits of Americans aged 62 and older, with a heavier focus on health care, housing and prescription drugs.
Cirksena also noted that the choice of index is central to the problem. “It comes down to how COLAs are measured,” he said. “They are tied to CPI-W. Seniors spend more on health care and housing, and those costs outpace the inflation numbers almost every year. That is why many retirees feel like COLAs are always playing catch-up.”
He added that using CPI-E instead “would make sense,” since it better reflects seniors’ spending patterns. “It’s not perfect, but it’s closer to reality than CPI-W. Shifting to CPI-E would most likely mean higher benefit increases over time.”
Others agree that while CPI-E has limitations, it could better reflect the economic realities of retirees.
“Adopting CPI-E would not be perfect (it has sampling and methodological challenges), but it would be a fairer and more accurate reflection of seniors’ cost pressures. It aligns policy with the program’s mission: ensuring that retirement income maintains real purchasing power, especially in areas where seniors feel inflation most acutely,” said Jackson Ruggiero, co-founder of DisabilityGuidance.org, told Newsweek.
The SSA will announce the official 2026 COLA in October.
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