2026 COLA Increase: For many retirees, Social Security is the main way they pay for their life. Even small cost-of-living adjustments, called COLAs might not feel like a big change, but they are very important. Without them the money retirees get would lose value over time because prices of things keep going up.
Looking at inflation over the years shows why COLAs are important for poeple. Between 1990 and 2020, prices went up about 2.4% every year. That does not sound too high, but over many years it adds up. In 2022, inflation jumped sharply to almost 8%. Seniors living on fixed incomes felt this a lot. Without COLAs, many retirees would struggle to pay for basic things like food, medicine, and housing.
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For example, imagine someone starts collecting $2,000 every month at age 62. If prices go up by 2.4 percent every year, by the time they are 74, they would need $2,658 each month just to live the same way. By age 84, they would need $3,370. Without COLAs, there would be a big gap between what they earn and what they need, making life very hard.
COLAs Benefits
While most people think COLAs help only Social Security retirees, they actually help more groups. People on Supplemental Security Income, seniors over 65, people with disabilities, and the blind also get these yearly increases. Federal workers who retired, military veterans, and some union workers with inflation-linked contracts benefit too.
COLAs also affect other government programs. Programs like food stamps and school lunch benefits use inflation numbers to decide who can get help. When prices go up, COLAs make sure families and individuals still get the support they need.
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Extra Steps that Retirees can Take
Financial experts say that retirees should not rely only on Social Security. They should also start saving and investing money to stay safe from rising prices.
- Short-term options like high-interest savings accounts or certificates of deposit can help with immediate needs.
- For long-term growth having a mix of stocks and bonds gives more security and flexibility.
