Many retirees rely on Social Security to provide a big portion of their incomes in their senior years. Although benefits are meant to replace only 40% of pre-retirement income, many people haven't saved enough to make that a reality, so Social Security will end up playing a larger-than-anticipated role in supporting them.
Since so many people are dependent on Social Security, it's critical that the benefits program works the way it should -- especially when it comes to preserving the buying power of benefits. Unfortunately, a senior advocacy group said that's not happening, and retirees are already suffering as a result.
Sadly, unless and until Congress makes changes, that suffering will continue, and the situation will only get worse.
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This big Social Security problem is making life harder for seniors every year
The Senior Advocacy Group that sounded the alarm about Social Security's big problem is the Senior Citizens League (TSCL). According to TSCL, the issue is with the formula that's used to determine annual Social Security Cost-of-Living Adjustments (COLAs).
COLAs are the key to helping benefits keep pace with inflation. Costs go up over time, so benefits must go up, too. Otherwise, Social Security checks would buy less and less every year until seniors late in retirement would get a check worth very little in the real world due to years of its value disappearing.
Unfortunately, TSCL has done the research to show that COLAs aren't keeping up with rising costs. Instead, benefits have lost a huge amount of their buying power, with the average payment for a retired worker in 2024 worth about $0.80 on the dollar, compared with in 2010.
TSCL has issued a stark warning that this problem is only going to get worse if something doesn't change very soon.
Congress needs to act to save seniors
In a recent press briefing commenting on Social Security's 2026 COLA, TSCL didn't mince words when it warned about the COLA issue that's ruining retirees' finances. The formula used to calculate them must be changed to avoid serious financial hardship for older Americans, TSCL explained.
"If Congress continues to pass the buck on switching to the CPI-E, the problem is only going to get worse and worse. Current retirees' Social Security benefits will fall further behind inflation, while future retirees won't just fall behind -- they'll start from the back," TSCL said in the press briefing.
What does this mean?
It's simple. Right now, COLAs are calculated by measuring how much the cost of goods and services has gone up year over year. The current formula uses CPI-W, which stands for the Consumer Price Index for Urban Wage Earners and Clerical Workers. The Senior Citizens League believes that this needs to change to the Consumer Price Index for the Elderly (CPI-E).
This seems like an obvious switch, of course, since seniors collecting Social Security are elderly and have different spending patterns than urban wage earners and clerical workers. The COLA has repeatedly underestimated the inflation they're experiencing because it underestimates the amount seniors spend on things like housing and healthcare, both of which tend to see higher-than-average year-over-year price increases.
It's not an obvious switch, though. First, CPI-E is experimental. Second, Congress would have to act to make the change, and since it would result in larger raises, changing to CPI-E would make Social Security's already-precarious finances even worse. A benefits increase, like the one that would come from using CPI-E to calculate COLAs, isn't likely at a time when many experts are calling for cuts because Social Security's trust fund is soon slated to run out.
Sadly, TSCL is probably right. CPI-E has shown bigger increases in costs than CPI-W 69% of the time across the last 25 COLAs. While retirees are getting a 2.8% raise in 2026, there's a very real chance that this won't be enough to fully cover cost increases (again). If it's not, it will leave retirees in a position to cut their budgets or take more money from their retirement plans.
Seniors may have no choice but to choose one of these two unpleasant options, and that choice will likely continue to be one they're faced with year after year as part of their retirement planning. That could change if there's a major political or economic shift that causes Congress to finally act.
