"The reason that Cost of Living Adjustments are built into Social Security is to try to protect seniors from the impact of inflation. Since the cost of goods and services goes up all the time, benefits have to go up too. If they didn't increase, then retirees would find themselves bringing home the same amount of money from their retirement checks but able to buy less with it every single year."
"Unfortunately, the COLA isn't actually helping retirees to maintain their buying power because it is not accurately measuring the inflation that they experience. Retirees tend to spend a lot of their money on things that become more expensive each year at a faster rate than the typical items people buy. For example, the costs of healthcare tend to go up far faster than the overall inflation rate, and housing has also become a lot more expensive in recent years than the overall inflation rate."
The 2026 Social Security Cost of Living Adjustment is projected at 2.7% and will be announced on October 24, 2025. A 2.7% bump exceeds the 2025 increase, yet it may not preserve retirees' purchasing power. COLAs aim to offset inflation, but the current measure does not reflect the specific inflation retirees face. Healthcare and housing costs often rise faster than overall inflation, and retirees spend a disproportionate share of income on these items. As a result, benefits increases can fall short. Retirees should consider planning steps to cope with persistent gaps between COLA and personal expenses.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]