Disappointed with the Cost of Living Adjustment (COLA) for Social Security in 2025? Prepare for More Unfavorable Updates.

Disappointed with the Cost of Living Adjustment (COLA) for Social Security in 2025? Prepare for More Unfavorable Updates.

In 2025, retirees received a 2.5% cost-of-living adjustment (COLA) for their Social Security benefits, a modest increase that reflects the easing but still persistent inflationary pressures. As we approach 2026, projections for the COLA range between 2.6% and 2.7%, according to recent inflation data.

The Social Security Administration will announce the official 2026 COLA in October, but these estimates offer a glimpse into what retirees can expect. The average retired worker currently receives around $2,005 per month, and a 2.6% to 2.7% COLA would lead to an increase of approximately $48 to $54 per month.

However, it's important to note that the official COLA is calculated using the CPI-W index, which may not fully capture the inflationary pressures faced by seniors, particularly in areas like housing and medical care. This means that some retirees might feel the pinch of rising costs more than the COLA increase indicates.

For low-income retirees, additional benefits beyond the COLA are available in 2025 to help offset the impact of rising living costs.

As retirees prepare for the 2026 COLA, it's crucial to remember that this increase might not significantly outpace the rising costs of living. This means that many seniors may struggle to keep up with their expenses if the COLA is around 2.5% or 2.6%.

To mitigate this, retirees might consider exploring opportunities in the gig economy. Whether it's playing in a band, designing furniture, selling artwork, or caring for pets, these side hustles can provide additional income and help carve out more buying power.

Another option is to build retirement savings once retired, which can be challenging. Going back to work, even part-time, may provide a solution.

In conclusion, while the 2026 COLA is expected to be around 2.5% or 2.6%, retirees should prepare for a similar or lower increase compared to 2025. By exploring opportunities in the gig economy and considering part-time work, retirees can take proactive steps to improve their financial situation and maintain their quality of life.

[1] The Senior Citizens League. (2025). 2026 Social Security COLA Estimate. [online] Available at: https://www.seniorsleague.org/2026-social-security-cola-estimate/

[2] The Balance. (2025). Social Security COLA: What Retirees Need to Know About 2026. [online] Available at: https://www.thebalance.com/social-security-cola-2026-what-retirees-need-to-know-3576649

[3] AARP. (2025). Low-Income Retirees May Qualify for Extra Social Security Benefits. [online] Available at: https://www.aarp.org/retirement/social-security/info-2020/low-income-retirees-may-qualify-for-extra-social-security-benefits.html

[4] Social Security Administration. (2025). Cost-of-Living Adjustment (COLA). [online] Available at: https://www.ssa.gov/cola/

[5] Social Security Administration. (2025). Average Monthly Social Security Benefit Amounts. [online] Available at: https://www.ssa.gov/oact/cola/AveMB.html

1. To compensate for the rising costs of living and potentially low 2026 COLA increases, retirees should explore opportunities in the gig economy or consider part-time work as additional income sources, thus enhancing their personal-finance situation during retirement.
2. Despite the expected 2.5% to 2.7% 2026 COLA increase, retirees need to be mindful of the potential ongoing inflationary pressures, particularly in areas like housing and medical care, and its impact on their personal-finance management.

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