Bad news for Social Security COLA adjustment in 2026: Here’s the problem with inflationary check increase for millions of Americans

With six months to go until the Social Security Administration (SSA) is expected to reveal its cost-of-living adjustment (COLA) for 2026, American retirees are currently slated to see their benefits rise by nearly $50 on average.

However, seniors’ monthly retirement check may not go up enough to stop them from losing purchasing power when it comes to the things they typically spend their money on. And such an eventuality would be nothing new, it appears.

What is the COLA and how much will it be in 2026?

Normally confirmed in October, before coming into effect at the start of the following year, the COLA seeks to prevent Social Security beneficiaries’ monthly checks from lagging behind the rate of inflation.

In October 2024, the SSA announced a 2.5% COLA for this year’s Social Security payments, providing American retired workers with a $49 average increase to their monthly check.

The adjustment for 2025 also increased the monthly payments made to other SSA beneficiaries, such as disabled workers and the surviving relatives of deceased Social Security recipients.

According to experts at The Senior Citizens League (TSCL), one of the U.S.’s major retiree groups, the COLA for 2026 is expected to be comparable to this year’s, as things stand.

In March, the TSCL released a forecast projecting the announcement of a 2.2% COLA next autumn.

But how is the COLA calculated?

The SSA works out each year’s COLA by referring to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) - an inflation indicator calculated by the U.S.’s Bureau of Labor Statistics (BLS).

To determine the COLA, the SSA compares the CPI-W for the third quarter of the previous year with the CPI-W for the third quarter of the current year.

If the indicator shows that the cost of living has gone up, a COLA is applied to reflect the percentage increase between the two points in time.

So what’s the problem for retirement recipients?

As is explained by The Motley Fool financial journalist Sean Williams, the problem for U.S. seniors is that the CPI-W is geared towards the spending habits of people who are of working age, not those who are of retirement age.

And these two sections of society tend to spend their money on different things.

“Whereas people in their 20s are likelier to spend a higher percentage of their monthly budget on things like apparel and education,” Williams notes, “seniors spend more than the typical working-age American on shelter expenses and medical care service costs.”

In March, the BLS announced that February’s CPI-W was 2.7%. However, the body also revealed that the increases experienced by shelter and medical expenses over the preceding 12 months were higher than that: 4.2% and 3%, respectively.

If this trend continues into the third quarter of 2025, many seniors on Social Security benefits stand to be poorer in 2026, despite the prospect of a larger monthly check from the SSA.

“Housing, in particular, puts extreme financial stress on seniors,” agrees the TCSL, which says retired workers have endured a steady decrease in their strength of their wallet in recent years.

In a study published in July 2024, indeed, the organization estimated that the buying power offered by Social Security retirement benefits has dropped by one-fifth since 2010.

How much would seniors get with a 2.2% COLA?

As of February 2025, just over 52 million retired workers in the U.S. received an average monthly Social Security payment of just over $1,980, per the SSA.

Should the TCSL’s current projection of a 2.2% COLA prove correct, average retirement benefits in 2026 would rise by $43 a month, to $2,223.

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