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The Social Security Administration announced Friday that benefit payments will rise 2.8% next year to offset higher living costs, giving the average retiree about $56 more per month beginning in January.
The 2026 cost-of-living adjustment, or COLA, marks a slight increase over last year’s 2.5% rise but remains below the historical average of 3.7%. The change is based on benchmark inflation data from July through September.
While inflation has slowed since its pandemic-era peak of nearly 10% in 2022, many Americans — especially older adults — continue to struggle with higher prices for essentials. Senior advocates say the way the COLA is calculated doesn’t fully reflect the expenses retirees face.
“The index doesn’t necessarily reflect the spending habits of older adults,” said Jessica Johnston, senior director at the National Council on Aging’s Center for Economic Well-Being. “A 4% adjustment would more accurately reflect these costs.”
Advocates say seniors are falling behind
The annual increase is tied to an inflation index that critics say gives too little weight to costs such as medical care, prescription drugs, rent, and home energy. Those categories make up a larger share of spending for retirees than for the general population.
More than one in five Americans receives Social Security benefits, including about 58 million people aged 65 and older. Though consumer sentiment among seniors has improved somewhat, economic data show many are falling behind financially.
Between 2018 and 2023, older Americans were the only age group to see an increase in poverty rates, even as their overall poverty level remains the lowest.
A recent report from the National Council on Aging found that mortality rates among older adults in the bottom 60% of wealth are nearly double those of their wealthier peers. The poorest 20% of seniors die, on average, nine years earlier than those in the top 20%.
The group estimates that 45% of senior households — more than 19 million — lack enough income to cover basic living expenses. About 34 million senior households would be unable to withstand a major financial shock such as serious illness, widowhood, or long-term care needs.
Widening gaps by wealth and race
Economic insecurity is especially acute among aging minorities. Census data show that 43% of Black and 44% of Hispanic adults over 65 have incomes below twice the federal poverty line.
Johnston said the idea that all older Americans are financially secure — particularly Baby Boomers — overlooks large generational and racial disparities. Members of the Silent Generation, who preceded the Boomers, have total assets worth roughly $20 trillion, compared with about $85 trillion for Boomers, according to Federal Reserve data.
“People are living longer, but not always better,” Johnston said. “We’re seeing more and more older adults aging into poverty.”
