The annual cost-of-living adjustment (COLA) is one of the most-anticipated announcements in the retirement community, and recent updates suggest it will be a mixed bag for retirees. According to nonpartisan senior advocacy group The Senior Citizens League (TSCL), the 2026 COLA forecast has been updated from 2.1% to 2.3%, which would result in an average retired-worker check increasing by approximately $46 per month next year.
However, independent analyst Mary Johnson predicts a lower COLA of 2.1%. The reason for this disparity lies in the inflationary measure used to calculate the COLA – the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Although the CPI-W has more than 200 weighted spending categories, its monthly readings are only used in the third quarter of the year. As a result, a modest reacceleration in inflation might lead to a higher-than-expected COLA.
In recent years, Social Security’s COLAs have been relatively low, with a range of 0.3% to 5.9%. However, due to rapid increases in US money supply during the COVID-19 pandemic, prevailing inflation rates soared, leading to larger cost-of-living adjustments. Despite this, retirees continue to face challenges with losing buying power, as expenses such as shelter and medical care services rise at a faster pace.
Experts warn that even a modestly higher COLA might not be enough to offset the steady loss of buying power for Social Security income. In fact, recent studies suggest that the buying power of a Social Security dollar has declined by 20% since 2010 and 36% from 2000 through February 2023. Therefore, it is essential for retirees to stay informed about COLA forecasts and plan accordingly to maintain their financial well-being.
Source: https://www.fool.com/retirement/2025/02/23/social-security-2026-cola-update-mixed-bag-retiree