You're not alone if you're eagerly anticipating the 2026 Social Security cost-of-living adjustment (COLA) announcement set for Oct. 15, 2025. While it's always nice to get more money, for many Social Security beneficiaries, it's absolutely essential if they hope to have any chance of staying financially secure for the next year.
Yet despite COLAs, many seniors find themselves having to make tough choices about how they spend their money. Looking ahead to next year, things probably won't get any easier, but preparing now can help you avoid unpleasant surprises.
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Half of seniors are cutting back on spending
As living costs continue to rise, more than half of seniors on Social Security report cutting back on discretionary spending, like dining out and travel, according to a recent Nationwide survey. Other actions seniors have reported taking to combat inflated living costs include:
- Reducing spending on essential items.
- Relying more on personal savings and retirement accounts.
- Downsizing their living situation.
- Seeking part-time work or additional income.
Less than one-third of those surveyed said they hadn't made any changes to combat rising living costs.
This has been going on for a long time. Seniors have watched their Social Security checks' buying power diminish by 20% since 2010, according to The Senior Citizens League (TSCL), a nonpartisan senior group.
It chalked this up to the way the government calculates Social Security COLAs. Currently, they're based on changes in average third-quarter inflation data as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures the cost of a basket of common goods and services over time. Strangely, retirees aren't included in the CPI-W at all.
There's a separate index for them: the Consumer Price Index for the Elderly (CPI-E). Many have pressed the government to calculate COLAs based on the CPI-E instead. Data shows that this change would've resulted in higher COLAs in most years between 2014 and 2024. But a change like this would require amending Social Security, and that's no easy feat.
Next year's Social Security COLA projection is 2.7%
We won't know the official Social Security COLA for 2026 for a few more weeks, but TSCL's latest projection puts it around 2.7%. This makes it just a hair above average compared to the last 20 years. However, it likely won't have much of a positive impact on your quality of life.
A 2.7% increase would add just $54 per month to the $2,008 average monthly retirement benefit as of August 2025. The $955 average spousal benefit would grow by just $26 per month. While certainly better than nothing, this might not be enough to stop inflation from eroding your buying power in 2026.
Once the Social Security Administration announces the official COLA, you can estimate how much more you'll get next year by multiplying the COLA percentage by your current benefit amount. Then, you can begin to plan how you'll pay for your expenses next year.
You may need to cut back on discretionary purchases further or rely more upon personal savings if you have them. The other strategies mentioned above could also help you balance your income and expenses.
If you're concerned that you won't be able to make ends meet, you can always check with your local social services agency to see if there are any federal, state, or local government benefits that can help you cover your essential costs. Keep in mind that it can take time for a benefit application to get approved, so it's best to apply as soon as you can if you hope to take advantage of this in 2026.
