3 Essential Facts About Social Security Cost-of-Living Adjustments (COLAs) for Retirees

Upcoming COLA Announcement: The Social Security Administration will announce the official cost-of-living adjustment (COLA) for 2026 on October 15, which will impact monthly benefits for retirees.

Inflation and COLA Limitations: COLAs are intended to help benefits keep pace with inflation, but they have not effectively done so, with benefits losing 20% of their buying power from 2010 to 2024 due to insufficient adjustments based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Healthcare Costs Impact: The CPI-W does not adequately reflect the rising healthcare costs that disproportionately affect seniors, leading to a mismatch in the calculation of COLAs and the actual expenses faced by retirees.

Part B Premiums and COLA Erosion: Increases in Medicare Part B premiums can diminish the benefits of COLAs for seniors, as these premiums are deducted directly from Social Security payments, impacting their overall financial situation.