If you’re waiting for the long-awaited 2026 COLA… We bring bad news. The COLA will not be enough to protect retirees from inflation. For 2026, it is estimated to be 2.6%, and that increase is very small compared to the current cost of living. Life keeps getting more expensive while our purchasing power keeps shrinking.

The situation is so critical that, according to experts, this purchasing power has eroded by more than 20% since 2010. The problem starts with the indicator used to decide how much payments go up. It’s the CPI-W, an index designed to reflect the expenses of active workers, not those who have already retired. And clearly, it doesn’t match.

So, what is COLA?

It’s called the Cost-of-Living Adjustment (COLA) and it’s based on the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers). It’s basically an automatic increase applied each year to Social Security payments in the United States (what retirees, people with disabilities, etc. receive) so they don’t lose purchasing power when prices go up.

And no, it’s not enough for everyone

Retirees spend a much larger percentage of their income on housing and medical care, precisely the two sectors with the biggest increases. While the CPI-W rose only 2.4% in the first half of 2025, housing costs went up 3.9% and healthcare 2.8%.

The 20% gap no one is fixing

According to The Senior Citizens League, the mismatch between COLA and the real cost of living has caused Social Security payments to lose 20% of their purchasing power since 2010. This means that even though payments are going up on paper, retirees can buy far less with that money.

Politics adds pressure too

The situation gets even worse due to political factors. The hiring freeze at federal agencies, pushed by the Trump administration, is affecting the accuracy of the data used to calculate inflation.

Do retirees trust their future?

Less than a third of retirees feel very confident they’ll have enough money to live comfortably for the rest of their lives. This confirms that the lack of a realistic COLA adjustment is directly affecting the well-being of millions of older people.

If prices are measured poorly, the adjustments will keep being wrong

With fewer people collecting data, experts (like those from the Wall Street Journal) warn that the CPI-W numbers might be less accurate. And if the data doesn’t reflect reality well, retirees will keep getting less than they need.

Retirees’ confidence in their financial future is extremely low

A study from the Employee Benefit Research Institute shows that less than a third of retirees feel confident they’ll be able to live peacefully for the rest of their lives. The reason is simple: their income isn’t enough and there’s no sign that will change anytime soon.

What can be done?

Some lawmakers have already proposed an alternative: to stop using the CPI-W and apply an index that actually takes into account how retirees spend. That would be a reasonable first step. Because it’s clear that the system, as it is now, doesn’t work.

One patch after another

Unless there’s a real reform, each new COLA will continue to be just that: a patch. A symbolic increase that fixes nothing. Many retirees will have to keep relying on aid, subsidies or their own savings if they have any. And the system will remain outdated.

In short: the 2026 COLA doesn’t fix anything

Even if it sounds like good news in headlines, the 2026 increase falls short. Very short. If the way this adjustment is calculated isn’t reviewed, retirees will keep losing purchasing power year after year. And with them, the idea of a dignified retirement after a lifetime of work also disappears.