Living costs have a tendency to rise over time. That's why Social Security's cost-of-living adjustments are so important.
Each year, Social Security benefits are eligible for an automatic COLA. That doesn't mean benefits increase every year. Rather, it's that they could increase if inflation levels warrant it.
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For months, seniors on Social Security waited patiently for news of a 2026 COLA. That announcement was supposed to come on Oct. 15, but got delayed nine days due to the government shutdown.
On Oct. 24, the Social Security Administration announced that benefits would be rising 2.8% in the new year. And while that's a more generous raise than the 2.5% COLA seniors received at the start of 2025, it's also not necessarily a raise retirees are celebrating.
In fact, a new Motley Fool survey of retirees found that 54% of those questioned said a 2.8% COLA wouldn't be enough. Meanwhile, 68% said that their upcoming COLA will do little in helping to cover essential living costs, or not help at all.
Part of the problem stems from the fact that it's difficult to live on Social Security in retirement without money coming in from an IRA, 401(k), or another savings plan. Social Security only replaces about 40% of the typical earner's preretirement paycheck.
The program's COLAs, meanwhile, have long fallen short in the face of inflation because they don't account for costs that are specific to seniors, like healthcare. So it's not surprising that many retirees today aren't expecting their finances to improve much once their 2026 COLA arrives.
That doesn't mean you're doomed to struggle financially, though. Here are a few ways you can supplement your Social Security benefits if you're not happy with your COLA.
1. Downsize your home
For many seniors, their home is their largest asset. The problem is that it's not so easy to benefit from the equity you have in your home unless you sell it.
Borrowing against your home in the form of a home equity loan, HELOC, or reverse mortgage isn't necessarily ideal. So a better bet may be to look at downsizing your home, especially if you're able to buy a replacement home mortgage-free and still come away with a decent pile of cash.
Imagine you pocket $500,000 in the course of selling your home and are able to buy a new place to live for $300,000. Suddenly, you've got a $200,000 nest egg. You can invest that money in dividend stocks, bonds, and other assets that continue to generate income, thereby providing yourself with an extra paycheck on top of Social Security.
2. Use your home as an income source
Maybe downsizing won't work for you because it will mean having to leave your community and be inconvenienced in certain ways. If you're eager to keep your home but you have extra space, look at renting out a portion of it for income. It could be a finished basement, a separate garage apartment, or even a single room.
Don't want to share a home with someone full-time? There may be portions of your home you can rent out, like a parking spot in your driveway. That gives you extra income without having someone in your space all the time.
3. Consult in your former field
You may not be looking to return to work full-time. But it could pay to see if you can consult in your former field and earn some money that way.
Companies tend to like consultants because they can be hired on a per-project basis. This means that you may not have the most steady work, but it's extra income nonetheless.
4. Embrace the gig economy
Who says side hustles are for younger folks only? Retirement is a great time to join the gig economy. And if you're not sure what sort of work you'll enjoy doing, why not dabble in a few different things until you find the right fit?
Not only could working provide you with extra income, but it's a great way to keep busy. And the busier you are, the less money you might spend on nonessential expenses.
It's natural to be unhappy with your 2.8% Social Security COLA, especially if you've been struggling and were hoping for a larger raise. The good news is that you can take matters into your own hands and find ways to boost your income beyond a 2.8% increase to your Social Security checks.
