Debate Erupts Over Calculation Method for Social Security's 2.8% COLA in 2026
Written by Emily J. Thompson, Senior Investment Analyst
Source: CNBC
Updated: Nov 05 20250mins
Social Security COLA Announcement: A 2.8% cost-of-living adjustment (COLA) will take effect in 2026, increasing average retirement benefits by $56 per month, but only 10% of seniors are satisfied with current COLA calculations.
Debate Over COLA Calculation Methods: Some lawmakers propose switching from the current CPI-W index to the CPI-E index, which may better reflect seniors' spending, while others suggest a temporary $200 monthly increase to help beneficiaries cope with rising costs.
Impact of Different Indexes: Calculations show that switching to CPI-E would yield only a slight increase in benefits compared to CPI-W, while the chained CPI could result in lower benefits, highlighting the complexity of measuring inflation's impact on purchasing power.
Concerns About Medicare Premiums and Trust Fund: Beneficiaries may face higher Medicare premiums in 2026, which could diminish the impact of the COLA, and the Social Security trust fund is projected to run out by 2032, prompting calls for broader benefit reforms.
About the author
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Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
