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A recent report by the Social Security Administration predicts a slight increase in the Cost of Living Adjustment (COLA) for 2026. This raise, though higher than the 2025’s increase, may still be disappointing for many recipients. According to the report, the COLA would be approximately 3.6% higher than last year’s. However, with inflation rates rising, many may find this increase insufficient to keep pace with the rising cost of living.
The average monthly Social Security benefit would increase from $1,628 to $1,688 under this scenario, which is about a $60 increase per month. However, the purchasing power of this raise may be limited by the increasing prices of necessities like food, housing, and healthcare.
As one analyst notes, ‘with prices rising at a pace that’s outpacing the COLA increase, many recipients may feel like they’re just spinning their wheels.’ The increase may also be offset by taxes on Social Security benefits, which would leave many with little to no real increase in their take-home pay.
Projected Increases and Implications
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The Social Security Administration predicts a COLA increase of 3.6% for 2026, which would result in the average monthly benefit increasing to $1,688 from $1,628 in 2025. This increase is slightly higher than 2025’s COLA but may still be disappointing for many recipients.
The government’s budget projections indicate that Social Security will be facing a significant shortfall in coming years due to an aging population and lower than expected revenue. This has sparked debates over potential reforms to the program, which may include changes to the COLA formula or benefit schedules.
The COLA Formula: What’s Next?
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The COLA formula is based on the Consumer Price Index (CPI) as measured by the Bureau of Labor Statistics (https://www.bls.gov/). This formula measures the percentage change in a basket of goods and services, which is used to determine the COLA. However, some argue that this formula is outdated and does not accurately capture the cost of living for retirees.
For example, the CPI does not account for long-term care costs, which can be a significant expense for many seniors. This limits the COLA’s effectiveness in keeping pace with the rising cost of living for retirees.
Lessons from 2025’s COLA: ‘Many Will be Disappointed’
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A recent report highlighted the disappointing outcome of the 2025 COLA, where many recipients felt that the increase was insufficient to keep up with rising living costs. This outcome was largely attributed to the below-average CPI inflation rate, which led to a lower-than-expected COLA increase.
BLS.gov reports that the CPI inflation rate for 2025 was significantly lower than projected, leading to a lower COLA increase. This outcome highlights the challenges of predicting COLA increases and the importance of accurately measuring the cost of living for retirees.
