The Social Security Administration (SSA) announced that the 2026 Cost-of-Living Adjustment (COLA) is expected to be the lowest since 2020, affecting millions of beneficiaries. The COLA, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), is designed to help Social Security benefits keep up with inflation. However, with inflation cooling and food and energy prices stabilizing, the formula for calculating COLA produces more minor adjustments.
This could leave many older Americans struggling to make ends meet, especially after navigating rising healthcare and housing expenses. Mary Johnson, a policy analyst at The Senior Citizens League (TSCL), said, “The 2026 COLA is shaping up to be one of the lowest in recent years, which could be a real challenge for retirees who are already stretching their budgets thin.”
According to TSCL, the 2026 COLA forecast as of March 12 is 2.2%, below the average seen since 2010. A 2.2% COLA increase in 2026 would be the smallest percentage increase in the past five years.
Smallest COLA since 2020 expected
To prepare for a smaller COLA in 2026, retirees should focus on budgeting and prioritizing essential expenses like housing, food, and prescriptions. Bringing in extra income through part-time work, renting out a spare room, or collecting dividends from investments could also help bridge the gap.
Additionally, seniors should explore programs like SNAP, Medicare support, and other senior-focused benefits that can help reduce expenses and make their dollars go further. Consulting with a financial professional to create a retirement plan that diversifies investments and manages withdrawals can also help ensure savings last throughout retirement. While the size of future COLAs will be influenced by inflation and the economy, retirees can take control of their own financial planning to minimize the impact of a smaller COLA in 2026.
By being proactive and making informed decisions, seniors can better navigate the economic challenges ahead and maintain their quality of life in retirement.
Image Credits: Photo by James Hose Jr on Unsplash
