Why Seniors Are Still Coming Up Short, Even With a Social Security COLA
Early indications are that Social Security recipients could receive a 2.7 percent cost-of-living adjustment (COLA) next year. That’s a modest increase over this year’s 2.5 percent COLA. In fact, The Motley Fool reports “the 2026 COLA will be far short of where it needs to be for retirees to truly maintain the standard of living that Social Security used to provide.”
Running the Numbers
The article points out that the average Social Security retirement benefit was $2,006.69 in July. If the 2026 COLA turns out to be a 2.7 percent benefit increase, seniors will get an additional $45.18 per month on average. That’s about $650 more per year.
That might not seem so bad to many people, but the article points out that this is “far less than what retirees would need if they were going to truly avoid losing any buying power.” The fact is that Social Security benefits have lost about 20 percent of their buying power since 2010.
To restore benefits to what they were worth in 2010, Social Security payments would need to increase by an additional $4,442 per year. Doing the math, that’s $3,792 more than the estimated $650 retirees will get if the COLA is just 2.7 percent!
New COLA Calculator
It’s clear that the current COLA calculator is not working effectively to keep up with rising costs and inflation.
Currently, Social Security uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate COLA. This metric measures the price increases experienced by blue-collar workers who live in areas with large populations.
Senior advocates such as The Seniors Trust believe the Consumer Price Index for Americans 62 years of age and older (CPI-E) would be a better formula, as it more accurately reflects the costs incurred by older adults, especially related to healthcare and housing.
The Social Security Expansion Act calls for adopting the CPI-E. Not only would this provide Social Security recipients with a fairer COLA, but this landmark piece of legislation also provides an across-the-board benefits boost of about $2,400 per year and long-term Social Security solvency.
