For many retirees, Social Security provides a vital source of income, helping them make ends meet despite modest average benefit checks. In recent years, however, the program’s cost-of-living adjustment (COLA) has been a topic of significant interest due to its impact on beneficiaries’ purchasing power.
The annual COLA announcement is the most anticipated event for retirees, as it determines whether their benefits will increase to keep pace with inflation. The latest forecast suggests a modest but welcome boost in 2026, with predictions ranging from 2.2% to 2.3%. This would be on par with the average COLA since 2010 and potentially lift the average monthly retired-worker benefit above $2,000.
However, experts warn that despite these optimistic forecasts, Social Security’s purchasing power remains a concern. The CPI-W, which calculates inflation for urban wage earners and clerical workers, has been found to be flawed in its approach to measuring retirees’ spending habits. This leads to COLAs that consistently fall short of the true inflation rate, eroding beneficiaries’ buying power.
A recent analysis by the Senior Citizens League (TSCL) reveals a 20% decline in Social Security’s purchasing power since 2010. To address this issue, experts recommend a more accurate measurement of inflation for retirees’ expenses, such as the Consumer Price Index for All Urban Consumers (CPI-U).
With President Trump’s upcoming tariffs potentially affecting the cost of goods and services, some forecasters are leaving room for adjustments in their estimates. However, overall, the 2026 COLA forecast offers a glimmer of hope that beneficiaries may finally see a significant boost in their benefits.
Source: https://www.fool.com/retirement/2025/04/20/social-security-2026-cola-promise-peril-retirees