There's a reason Social Security benefits are eligible for an automatic cost-of-living adjustment, or COLA, each year. The purpose of COLAs is to help ensure that Social Security recipients are able to keep up with their expenses over time as inflation makes the cost of living increase.
In 2025, seniors on Social Security got a 2.5% COLA. It's too soon to know what 2026's COLA will amount to, since that increase is based on third-quarter inflation data. But all told, the general consensus is that next year's Social Security raise may not be much to write home about.
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If you're someone who's heavily dependent on Social Security -- and Social Security COLAs -- to make ends meet, the weeks leading up to those COLA announcements can be stressful. The reality, though, is that having to bank on Social Security COLAs to keep up with your bills is not a great way to live. If that's the situation you're in, it could pay to do the following.
1. Review your spending carefully
If you get most or all of your retirement income from Social Security, then there's a good chance you live a pretty frugal lifestyle already. But that doesn't mean there isn't room to make further cuts.
One thing it pays to do is actually go over all of your expenses and figure out if they're all really necessary. It may be that canceling a subscription frees up $20 a month, or that finding a supermarket that offers a senior discount on Wednesdays puts another $30 a month back in your pocket. When you're in a place where your Social Security COLAs make a difference, small changes like these make a difference, too.
2. Consider a part-time job
The whole point of retirement is to not work, so the idea of having a job may seem unappealing. But if you don't have health issues stopping you from getting a job, you may want to seek out part-time work. Even if you decide to join the gig economy and work just a few hours a week, it could make a difference in your financial picture.
Think about it this way. The average Social Security benefit today is about $2,000 a month. If next year's COLA is the same as 2025's -- 2.5% -- that takes the average benefit up to around $2,050. But you can potentially earn much more than $50 per month driving for a ride-hailing service, house-sitting, or doing something similar -- even if it's tedious work like data entry from home.
3. Make strategic lifestyle choices
There are some parts of the country where Social Security benefits can go a lot further. Think about where you live and consider whether there's a less expensive area you can relocate to.
You probably don't want to pack up and move to a less expensive state to save money if you don't know a soul there and won't have a support network. But if your sibling lives in a more affordable state than you do, it may not be unreasonable to consider a move.
Along these lines, downsizing to a smaller home could make sense, especially if you own yours and are sitting on a lot of equity. Say your home is mortgage-free and worth $300,000. If you're able to sell it, buy a smaller home for less, and come away with $60,000 after accounting for all of the costs involved, like a real estate agent fee, that's money you can dip into to buy yourself more breathing room.
It's not a comfortable thing to have to bank on a Social Security COLA each year just to be able to pay your basic bills. If that's the situation you've landed in, see if there's room to reduce your spending, earn some money, or make a lifestyle change that leads to lower living costs. You may find that not having to rely as much on Social Security raises each year reduces a lot of your stress.
