3. Social Security COLA May Not Keep Pace With Real Costs
Cost-of-living adjustments (COLA) are designed to protect Social Security benefits from inflation erosion. However, the formula used to calculate COLA is based on the Consumer Price Index for Urban Wage Earners (CPI-W), which doesn’t always reflect seniors’ spending patterns.
Healthcare, housing, and food costs—major expenses for retirees—can rise faster than overall inflation. Even if Social Security payments increase in 2026, seniors may still feel financial pressure.
A larger COLA can also have side effects:
- Increased taxable Social Security benefits
- Higher Medicare Part B and Part D premiums
- Potential movement into higher tax brackets
The increase helps—but it doesn’t guarantee improved purchasing power.
