Posted on Tuesday, November 4, 2025
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by The Association of Mature American Citizens
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1 Comments
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AMAC Magazine Exclusive – By Gerry Hafer
The 2.8 percent Social Security cost-of-living adjustment was announced in late October, bringing with it a mixed reaction among America’s seniors. For the average beneficiary, the 2026 COLA adds about $56 to their monthly benefit amount beginning in January. For many, this brings some relief in the struggle to meet continually growing day-to-day living expenses. That’s good news, but is it enough?
Let’s take a quick look at the relatively simple COLA calculation. The Bureau of Labor Statistics takes the current year’s average third-quarter Consumer Price Index[1] figure and divides that figure by the same figure from the preceding year, with the result representing the year-over-year change in prices. Theoretically, this approach measures how much of an adjustment is needed to keep pace with rising costs and sets the COLA for the coming year.
How Does the 2026 COLA Compare?
Automatic COLAs began in 1975. Since that time, the average adjustment has been 3.7 percent, though that figure is skewed by a few high-inflation years—1979 (9.9 percent), 1980 (14.3 percent), 1981 (11.2 percent), and 2022 (8.7 percent). Excluding those outliers, the historical average drops to 3.1 percent.
This year’s 2.8 percent increase is therefore below the long-term average but in line with more recent inflation trends. It represents the fifth consecutive year of at least a 2.5 percent increase, something that hasn’t happened in about three decades.
How Adequate Is this Year’s COLA?
The National Council on Aging has expressed concern with the current process. “COLA might reflect the inflation rate,” said NCOA President and CEO Ramsey Alwin in a statement assessing the adequacy of the recent adjustment, “but it is woefully insufficient for older Americans who already have high health care costs and are facing even greater increases in their Medicare costs in 2026.”
The Senior Citizens League (TSCL) has echoed these concerns. Between 2000 and 2024, the costs faced by seniors have grown far faster than benefits, leading to a 36 percent loss in purchasing power, according to TSCL Executive Director Shannon Benton. TSCL studies have concluded that Social Security represents more than half of the income of nearly three-quarters of America’s seniors, with about 10 percent of retirement-age Americans living in poverty.
Medicare Part B Premiums Further Dilute Seniors’ Purchasing Power
While the COLA announcement specifically affects Social Security, Medicare premiums play a crucial role in determining how much of that COLA makes it to seniors’ bank accounts. That’s because most beneficiaries have their Medicare Part B premiums deducted directly from their Social Security payments.
For 2026, the Centers for Medicare & Medicaid Services (CMS) projects an 11.6 percent increase in monthly Part B premiums (from $185 to $201.60), thus negating a substantial portion of the COLA. Taking this number into account, for an average Social Security recipient, the approximate monthly increase of $56 noted earlier would be a net $34.50.
What Does the Future Hold?
Given Social Security’s tenuous financial future and the increasingly urgent need for reform, it’s likely that changes to the COLA process will be considered. TSCL, for example, advocates the use of the Consumer Price Index for the Elderly (CPI-E), a research price index designed to measure price changes weighted toward spending patterns of older Americans. Many other sources have weighed in with proposals to influence the COLA calculation process, but until a full plan to address Social Security’s looming insolvency, the outcome remains to be seen.
[1] The current process uses the Consumer Price Index for Urban Wage Earners & Clerical Workers (CPI-W)
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