As we enter 2026, the Social Security cost-of-living adjustment (COLA) is final, and retirees are going to start getting larger checks this month.
Unfortunately, while this seems like a good thing, retirees are actually facing a major hit when it comes to this year's COLA.
Here's the problem with the COLA and details on why it doesn't go far enough to provide seniors with the security that it should offer.
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How much is the final COLA for 2026?
The Social Security COLA for 2026 is 2.8%. This is one of the lower adjustments made during the pandemic era. By comparison, here is what the COLAs have looked like for the past few years:
- 2.5% in 2025
- 3.2% in 2024
- 3.2% in 2023
- 8.7% in 2022
- 5.9% in 2021
While it is a larger increase than last year, many seniors who retired during the pandemic had gotten used to a history of larger COLAs. Seeing two years of adjustments in a row under 3% is disappointing enough in and of itself, even without getting to any other issues with the raise.
Why are retirees taking a financial hit?
Unfortunately, there's more wrong with the COLA than just the fact that it's smaller than the raises have been in recent years. The biggest problem is that benefits just aren't keeping pace with the inflation retirees are actually experiencing.
In fact, according to research from The Senior Citizens League, a typical senior who retired in 1999 has actually lost close to $5,000 in Social Security payments because of a problem with the formula used to calculate benefit increases.
The formula focuses on changes to the prices of a basket of goods and services used by urban wage earners and clerical workers. Seniors don't spend the same way as this group, instead devoting more of their income to healthcare and housing -- both of which tend to see inflation that's far above the overall inflation rate. The end result is that their raises are too small most years and are likely to be too small in 2026 as well.
That's especially true given that mortgage rates and home prices remain high, and given that Medicare premiums have risen from $185 in 2025 to $202.90 per month in 2026. These extra premiums will come right off this COLA, leaving retirees with less.
What can seniors do about this financial hit?
Unfortunately, there's not much retirees can do about the financial hit they're taking. The COLA is set in stone and will start being paid out this month.
Retirees just need to be aware that the 2.8% increase won't really give them more buying power, and they still may end up losing ground -- so they should make their spending plans accordingly.
