Here’s Why the 2026 COLA Might Fail to Help Retirees Keep Up With Costs

COLA 2026 Social Security: Seniors who rely on Social Security could be in for a tough year in 2026. Even though there’s a small increase expected in their benefits, it may not be enough to keep up with how fast prices are rising. As of June 2025, the Senior Citizens League believes the COLA for 2026 will be about 2.5%. That’s a bit higher than what was expected earlier, but still not enough when you look at how much more people are paying for things like food, rent, and especially healthcare.

The whole purpose of COLA is to help retirees keep their buying power even when prices go up. It’s been around since 1975, and it’s based on inflation numbers collected by the Bureau of Labor Statistics. But the way they measure those numbers might be part of the problem. Right now, COLA is based on something called the CPI-W, which looks at how urban wage earners and clerical workers spend their money.

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Here’s the thing. Seniors usually spend way more on healthcare. While a worker might spend about 7% of their income on medical costs, seniors can spend 16% or even more. But because CPI-W doesn’t reflect that reality, many seniors say they feel like the yearly increase in their Social Security checks just doesn’t match what they’re really spending. According to reports, this has caused a serious drop in their buying power almost 20% lost since 2010.

Some experts have been pushing for the government to use something else called CPI-E, which is made just for older adults and looks at their real expenses. But lawmakers haven’t made that change yet. On top of that, the way the inflation data is being collected isn’t as strong as it used to be. A hiring freeze at the BLS has led to less real-world data being gathered, and now they’re relying more on modeling. That might mean the numbers used for COLA aren’t fully accurate.

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Things could get even harder later this year. The Trump administration’s return to using tariffs might push prices up again. That could cause inflation to rise, but it might not show up in time to be included in the COLA formula. This creates a frustrating loop for seniors, where prices go up, but their benefits don’t match.

A recent survey by The Senior Citizens League said that 80% of seniors think their personal inflation rate is actually more than 3%, even though official numbers show a smaller increase. That means many of them are already feeling financial pressure.