With January well underway, the 2026 Social Security COLA is hitting retirees' bank accounts this month. This means seniors will see a bigger monthly Social Security check thanks to the 2.8% benefits increase.
While this may seem like good news, it's not. In fact, there's no silver lining to the 2026 COLA, and it doesn't mean good things for retirees.
Here's why.
Image source: Getty Images.
The COLA shows inflation is still high
Social Security COLAs aren't just random raises. They're calculated based on a formula used to measure inflation, or year-over-year price increases.
The fact that the COLA is 2.8% for 2026 (higher than the 2025 COLA) means that inflation is worse this year than last, and CPI-W measurements show the price of goods and services rose by around 2.8%.
The Federal Reserve's target rate of inflation is 2%, meaning inflation has remained above the target rate for yet another year. This has been an ongoing issue since the end of the COVID inflation surge, and it's not good for seniors living on a fixed income.
Most seniors have conservative investments in their retirement plans, so this money and the money in savings accounts may be losing ground as rapid price increases continue.
At least seniors got a Social Security raise -- right?
You may think the silver lining is that Social Security checks got bigger. And technically, that's true. Checks are larger, on paper.
But the COLA won't give seniors more buying power. At best, it will maintain it. And it probably won't even do that.
The Senior Citizens League has made it clear that problems with the COLA formula have consistently produced COLAs that are too small, so the real value of Social Security benefits has been declining over time. In fact, benefits have lost 20% of buying power since 2010.
With the Medicare premium increase happening in 2025, which will take up $17.90 of the COLA since premiums are increasing from $185 to $202.90, the majority of retirees who get Medicare premiums withdrawn from their checks automatically won't even get much of a raise at all.
What can retirees do about these issues?
The only thing retirees can do about these problems is to make the smartest money choices they can. This means living within their means, but it also means making sure to invest wisely with a good mix of assets that limits risk and maximizes the chances of earning returns that beat inflation.
Learning about your investment options can help you do that, so you can thrive despite the problems with Social Security checks.
