As January 2025 comes to a close, many individuals are already looking ahead to 2026 and focusing on their finances. For those on fixed incomes like Social Security, keeping track of the upcoming Cost Of Living Adjustment (COLA) is a crucial part of financial planning. The Senior Citizens League (TSCL) is forecasting a modest increase of around 2.1% for 2026, following a 2.5% increase in 2025 – the smallest COLA hike in recent years.
TSCL’s prediction is based on inflation data gathered by the Bureau of Labor Statistics Consumer Price Index, the same method used by the Social Security Administration to calculate COLA adjustments. Despite initial estimates of a 2.8% increase for 2026, cooling inflation may result in the lowest COLA since the start of the COVID-19 pandemic.
While a slower inflation rate can be positive, the league warns that it does not mean prices will decrease, but rather that they will increase at a slower pace. This could lead to many seniors facing a budget shortfall, as many worry that their retirement income may not be sufficient to cover essential expenses like groceries and medical bills.
TSCL’s data from the 2024 Senior Survey highlights that 62% of older Americans fear their retirement income will not be enough to meet basic needs. The organization emphasizes the importance of Congress taking action to address years of below-par COLAs and help improve seniors’ quality of life.
The group also mentions President Donald Trump’s proposal to eliminate taxes on Social Security benefits, potentially saving seniors up to $3,000 annually – a significant amount for many retirees. Adjusting the income thresholds for taxation on benefits, which were established in the 1980s, could provide much-needed relief to seniors.
In conclusion, staying informed about upcoming COLA adjustments and understanding their impact on retirement income is crucial for financial planning. Keep an eye on future developments and policy changes that could affect seniors’ financial well-being.
Attribution:
This article was summarized and republished from the original source.
Please check the original article here: https://www.masslive.com/news/2025/01/social-security-early-cola-predictions-are-in-will-it-help-or-hurt-beneficiaries.html.