{"id":597741,"date":"2026-09-12T03:54:14","date_gmt":"2026-09-12T03:54:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/597741\/"},"modified":"2026-09-12T03:54:14","modified_gmt":"2026-09-12T03:54:14","slug":"social-security-cola-is-likely-to-increase-next-year-so-could-the-pressure-to-change-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/597741\/","title":{"rendered":"Social Security COLA is likely to increase next year. So could the pressure to change it."},"content":{"rendered":"\n

New inflation data suggests seniors will see heftier Social Security checks next year<\/a>. <\/p>\n

The annual cost-of-living adjustment, or COLA, is projected by AARP to be 3.6%, increasing the average retiree’s monthly check by around $75. This year’s COLA of 2.8% bumped up the average benefit by $56. <\/p>\n

If this projection sticks, the 2027 COLA will be the highest in four years \u2014 but still not enough for millions of retirees to keep up with rising food, energy, and healthcare costs<\/a>. <\/p>\n

“No matter if the COLA announcement comes in slightly higher or slightly lower than our prediction, seniors will not be happy,” said Shannon Benton, executive director of the Senior Citizens League, which projects a 3.5% COLA. <\/p>\n

The annual adjustment is calculated by averaging inflation data for the third quarter of the year and comparing that to the previous year, based on the Consumer Price Index for all urban wage earners and clerical workers (CPI-W). The CPI-W weights the costs of goods and services paid by the urban segment of the population more than other expense categories. <\/p>\n

The forecasts are based on inflation data, which showed consumer prices in August rose 3.4%. The CPI-W rose 3.5% last month compared to a year ago. <\/p>\n

There are concerns about that calculation, namely that urban workers face different financial pressures than retirees, who typically spend, for example, a greater share of their income on healthcare and prescription drugs. <\/p>\n

“Social Security COLAs are supposed to protect beneficiaries from inflation, but they have increasingly fallen short of the costs seniors actually face,” Benton said.\u00a0 <\/p>\n

2 controversial proposals <\/p>\n

Two big ideas are getting attention in Washington about changing how the COLA is calculated. <\/p>\n

One proposes using the Consumer Price Index for the Elderly, or CPI-E, to calculate COLAs. CPI-E expenditures are weighted differently, with medical care, housing, and recreation costs making up a larger share of the index than food, apparel, transportation, and education costs. <\/p>\n

“The CPI-E is designed around the spending patterns of older Americans,” Benton said, and “can provide a more realistic measure of the inflation they experience.” <\/p>\n

It doesn’t produce a dramatically higher COLA every year, but even relatively small differences compound over a long retirement. <\/p>\n

“It’s actually more consequential than meets the eye, and that just digs the hole a little deeper on Social Security solvency in a way that might make it challenging to make this change,” said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities. <\/p>\n

Story Continues <\/p>\n

“The CPI-E is, on average, a smidge higher, .3 percentage points higher than the CPI-W. But even if you’re increasing it a little bit this year, that goes into the base of next year and then continues to compound over time, so it actually does make a significant difference for people who have received benefits over decades,” Romig said.\u00a0 <\/p>\n

“If you’re starting to receive benefits at 65, by the time you’re 85, that’s like a lot of smidges,” she added. <\/p>\n

\"Retiree<\/a> AARP projects the annual cost-of-living adjustment, or COLA, to be 3.6%, increasing the average retiree’s monthly check by around $75. (AP Photo\/Cathy Bussewitz) \u00b7 ASSOCIATED PRESS <\/p>\n

Social Security’s reserves could run out at the end of 2032. At that point, if no adjustments are made, the entitlement program’s Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay out roughly 80% of benefits to seniors, according to the 2026 Social Security and Medicare Trustees’ annual report. <\/p>\n

Indexing COLAs to CPI-E instead of CPI-W would increase the program’s long-term shortfall by roughly 11%, according to government estimates. <\/p>\n

That said, the CPI-E doesn’t always produce a higher COLA, and that’s especially the case in years when gasoline prices rise rapidly, Mary Johnson, a Social Security and Medicare policy analyst, told Yahoo Finance. “We may find that the CPI-W would actually pay a higher COLA than the CPI-E for 2027 because that index is weighted more heavily for oil and energy costs.” <\/p>\n

A second proposal calls for a “flat-rate COLA<\/a>” in which all beneficiaries would receive the same dollar increase.\u00a0 <\/p>\n

It’s being proposed by the Committee for a Responsible Federal Budget, which advocates for debt reduction and balanced federal budgets. Under this plan, the COLA would be tallied up as it always has, but would multiply the COLA percentage by the dollar value of benefits received by someone at the 20th percentile of the benefit distribution \u2014 in other words, the low end.\u00a0 <\/p>\n

In 2025, the 20th-percentile benefit was $1,223 per month, the 90th-percentile benefit was $3,247, and the average was $2,071.\u00a0 <\/p>\n

If the flat-rate proposal had been in effect, the average retiree would have received a COLA of $34.20 per month in 2026 rather than the $57.90 they did receive, according to an analysis<\/a> by AARP’s Public Policy Institute. <\/p>\n

This would have covered a 1.7% inflation rate, well below the actual 2.8% increase in prices.\u00a0 <\/p>\n

It’s true that every beneficiary would still receive an increase in their benefits, but 80% of beneficiaries would receive a smaller adjustment than they do now, the analysis found. <\/p>\n

“On its surface, this proposal does not look as dramatic as it really is,” the Public Policy Institute’s Rich Johnson told Yahoo Finance. <\/p>\n

“It’s being framed as something that’s only going to hit very high-income people,” he said. “And\u00a0that’s really not true. It would significantly cut the COLA for many people. This kind of proposal would completely upend the essential element of the COLA \u2014 to protect retirement security for older people.” <\/p>\n

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,<\/a>” “In Control at 50+: How to Succeed in the New World of Work<\/a>,” and “Never Too Old to Get Rich.” Follow her on Bluesky<\/a> and X.<\/a> <\/p>\n

Click here for the latest economic news and indicators to help inform your investing decisions<\/a> <\/p>\n

Read the latest financial and business news from Yahoo Finance<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"New inflation data suggests seniors will see heftier Social Security checks next year. The annual cost-of-living adjustment, or…\n","protected":false},"author":2,"featured_media":597742,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,25151,246,40565,9558,111,139,69,244,245,294621,1050],"class_list":["post-597741","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-cola","tag-finance","tag-healthcare-costs","tag-inflation-data","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-personalfinance","tag-shannon-benton","tag-social-security"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/597741","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=597741"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/597741\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/597742"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=597741"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=597741"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=597741"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}