Millions of US seniors could lose full Social Security COLAs. New proposal may preserve program, but here’s who loses

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Social Security is a popular but expensive program.

With the trust fund facing depletion in just a few years, experts have suggested different ways to cut costs and make the program more sustainable, including raising the full retirement age or eliminating the payroll tax cap for high-income earners.

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Now, the Committee for a Responsible Federal Budget (CRFB), a bipartisan nonprofit, is adding another innovative solution to the mix: limiting cost-of-living adjustments (COLA) for the highest-income earners (1).

In a white paper published in October that cites calculations by the Urban Institute, the organization says the proposed change “could be a rapid, thoughtful and progressive way to help restore solvency and put Social Security on a sustainable path.”

The proposal is still just that — a proposal. But the timing is becoming more urgent. The latest Social Security Trustees Report, released in June 2026, says the retirement trust fund is projected to run out of reserves in the fourth quarter of 2032. If Congress does nothing, incoming revenue would then be enough to pay just 78% of scheduled retirement benefits. The combined retirement and disability trust funds are projected to last until 2034, with 83% of scheduled benefits payable after reserves are depleted (2).

If implemented, this shift could make it difficult for some beneficiaries to sustain their purchasing power later in retirement.

And that matters because Social Security recipients are about to get another COLA (3). AARP’s latest estimate is 3.5%. The official adjustment is expected in October, after September’s inflation data is released (4).

Here’s a closer look at why this change is being proposed and how it could impact your retirement plans.

What is COLA?

COLA is a mechanism built into the Social Security system that helps protect beneficiaries from the impact of inflation.

Initially, these adjustments were done on an ad-hoc basis and needed congressional approval. But when inflation flared up in the 1970s, Congress enacted a provision to allow for automatic annual COLAs. Since then, the annual COLA is linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), an official measure of the monthly price change in a basket of goods and services, such as food, energy and medical care.

For 2026, the Social Security Administration pegged COLA at 2.8% (5). That increase took effect with benefits payable in January 2026.

Looking ahead, inflation has cooled somewhat, but prices are still rising. July’s CPI-W was up 3.4% from a year earlier, according to the Senior Citizens League. Based on the latest data, the group estimates a 3.6% COLA for 2027 — which would be the largest annual increase since 2023 if the estimate holds (3).

Under the CRFB’s new proposal, all beneficiaries will continue to receive an annual COLA (1). However, retirees with the largest benefits — and typically the highest lifetime earnings — will face a fixed-dollar cap on their annual COLA.

So if COLA is 2% in a given year, someone who receives $50,000 in total annual benefits would typically see a $1,000 bump, but would now face a potential cap at $900 instead. Beneficiaries earning less than $45,000 would still see the full adjustment.

The $45,000 figure is just an example — it isn’t a proposed income cutoff. Under CRFB’s model, the cap would be based on the COLA received by beneficiaries around the 75th percentile of benefits.

This cap can be calculated in a variety of ways and for its white paper, the CRFB suggested setting the cap at the COLA received by the 75th percentile beneficiary based on their primary insurance amount (PIA) — the benefit a retiree would receive if they claimed at their full retirement age (FRA).

“As with the benefit itself, the cap would be adjusted upward or downward based on collection age,” explained the paper (1). “For example, the cap would be reduced by 30% for those who began collecting at age 62 and increased by 24% for those who began collecting at age 70. Similarly, the cap would be adjusted for benefit type. For example, it would be half as high for a spousal benefit.”

Under that version, roughly the top 25% of beneficiaries could eventually get smaller annual increases than they would under current law. But they wouldn’t lose their COLA altogether.

In 2055, benefits would be 6% lower for the top quintile, including 7% lower for the top 5% of earners.

Why is a change being proposed?

The CRFB’s proposal may seem radical, but it reflects the real risk of cuts that all beneficiaries currently face.

And that’s why the pressure to act is growing. Social Security checks wouldn’t suddenly disappear if the trust funds run dry. But without congressional action, the program wouldn’t have enough money to pay the full benefits promised under current law (2).

The latest Trustees Report also points to another recent pressure on the system: the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025. By reducing the amount of Social Security benefits subject to federal income tax for some recipients, the law is expected to reduce revenue flowing into the program (2).

By focusing on high-income earners, the CRFB argues it is limiting the cuts to only those who can most afford it, while preserving the system for middle- and low-income retirees who need the COLA more.

According to its estimates, imposing a hard cap on the top 25% of Social Security beneficiaries could save $115 billion over 10 years, nearly 10% of the program’s 75-year funding shortfall. Alternatively, if the cap applies at the 50th percentile, half of all beneficiaries would face a limit on their COLA adjustment and the system would save $385 billion over a decade.

The think tank acknowledges that a COLA cap would do little to delay insolvency on its own and other reforms will be needed. However, since it would improve solvency, it would shrink the coming cut and actually increase payable benefits by about 2% for those in the bottom three quintiles.

That’s the key point because the COLA cap wouldn’t fix Social Security on its own. CRFB sees it as one piece of a broader package of tax and benefit changes aimed at shrinking the program’s long-term shortfall.

What comes next

It doesn’t seem like lawmakers have commented on the CRFB’s proposal, suggesting it hasn’t drawn much attention in Washington. And the proposal remains one of many ideas circulating as lawmakers debate how to close Social Security’s funding gap.

Lawmakers are still weighing other ways to shore up Social Security. The SSA’s list of solvency proposals includes the “We Can’t Wait Act of 2026,” introduced by Sens. Susan Collins and Maggie Hassan in February, showing that there’s no shortage of ideas for closing the program’s funding gap (6).

For retirees, that doesn’t mean it’s time to panic — or change a claiming strategy based on a proposal that isn’t law. But it is a good reminder that future Social Security benefits aren’t guaranteed to look exactly like they do today.

Taxpayers can expect some mix of adjustments or reforms, whether through higher revenues, slower benefit growth or structural tweaks, as politicians aim to avoid an abrupt reduction in payments.

For now, a full COLA is still the law and the 2027 increase is expected in October. But proposals like CRFB’s offer a glimpse at what could be on the table if Congress eventually tackles Social Security’s funding gap — and higher-income beneficiaries could be asked to give up some inflation protection in the process.

Prepare your finances now

Whether you’re already retired or just getting started with your career, these reforms will likely impact you.

Changes to the program may mean smaller benefits, delayed payouts or adjustments to eligibility — all of which could leave future retirees needing to fill a bigger income gap on their own.

If you want to ensure you’re maximizing your retirement contributions, it could pay to speak to a qualified financial advisor.

Research from Vanguard shows that working with a financial advisor can add about 3% to net returns over time. That difference can become substantial. For example, if you started with a $50,000 portfolio, professional guidance could mean more than $1.3 million in additional growth over 30 years, depending on market conditions and your investment strategy.

Finding the right advisor is simple with Advisor.com. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance.

A professional advisor can also help you determine how many years you have left to invest before retirement and assess your comfort level with market fluctuations — two key factors in building the right asset mix for your portfolio.

Through Advisor.com, you can schedule a free, no-obligation consultation to discuss your retirement goals and long-term financial plan.

Take advantage of helpful resources

As you get closer to retirement, every dollar starts to matter more. Rising health care costs, uncertain markets and fixed incomes can make it harder to stretch your savings — especially if you’re trying to plan for decades ahead.

You might want to consider joining senior-focused organizations like AARP for discounts on almost everything — from prescriptions and dental plans to travel, entertainment and insurance.

As one of the most trusted organizations for older Americans, AARP not only offers money-saving perks, but they can also help you make informed financial and health decisions.

AARP members get access to guides that can help you make the most of Social Security, choose the right Medicare plan and uncover other government benefits — potentially saving you thousands.

Invest in inflation-proof assets

Building a portfolio that can withstand inflation is another way to protect your finances. Certain assets have historically performed well during periods of rising prices, helping investors preserve their purchasing power.

Gold, for example, has long been viewed as a hedge against inflation. Because it isn’t tied to the performance of any single currency or economy, gold is often regarded as a store of value when purchasing power is reduced.

A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.

Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.

With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.

If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.

Invest in real estate

Real estate can be a useful source of income in retirement, but owning a rental property comes with plenty of work. For investors who want real estate exposure without taking on those responsibilities, there are other ways to get in.

One option is to invest in shares of vacation homes and rental properties through Arrived.

Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning potential passive income stream without the extra work that comes with being a landlord of your own rental property.

To get started, simply browse through their selection of vetted properties, each picked for its potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100.

Once you’re an investor with Arrived, you’ll gain access to their newly launched quarterly secondary market, where investors can buy and sell shares of individual rental and vacation rental properties directly on the platform.

This allows you to buy into properties you may have missed at the initial offering or sell shares before a property reaches the end of its hold period.

With access to more than 400 properties in 60 cities, this gives investors another way to gain exposure to real estate and potentially build a more diversified portfolio.

And there are other ways to get a piece of the real estate market without buying an entire property.

Rental properties have long been a proven source of steady, passive income for high-net-worth investors. It’s no wonder that real estate accounts for nearly 25% of the typical family office portfolio. However, the time, effort and costs involved in managing and maintaining multiple properties prevent many from investing. So unless you’re a hedge fund titan or an oil baron, you’ve been shut out of one of the most profitable corners of the market.

Mogul offers a possible way to bridge this gap. This real estate investment platform offers fractional ownership in blue-chip rental properties, giving investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.

Founded by former Goldman Sachs real estate investors, the team handpicks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional-quality offerings for a fraction of the usual cost.

Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% and 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

Every investment is secured by real assets, not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.

Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.

Millions of US seniors could lose full Social Security COLAs. New proposal may preserve program, but here’s who loses

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