First introduced in 1975, the cost-of-living adjustment (COLA) system is intended to help beneficiaries \u2014 retirees who receive Social Security, including Old-Age, Survivors, and Disability Insurance (OASDI) and Supplemental Security Income (SSI) recipients \u2014 keep up with rising prices.<\/p>\n
According to the Social Security Administration<\/a> (SSA), a 2.8% COLA will increase monthly Social Security payments by $56 on average this year. COLAs aren\u2019t designed to increase one\u2019s wealth, but with so many retirees struggling to make ends meet, it would be helpful if their monthly checks weren\u2019t subject to the depreciating effects of inflation<\/a>.<\/p>\n Be Aware: Suze Orman Flags 2026 Social Security Update Many Retirees Overlook<\/a><\/p>\n Check Out: 4 Safe Accounts Proven To Grow Your Money Up To 13x Faster<\/a><\/p>\n Here are some ways that inflation can reduce the real value of your Social Security check<\/a>.<\/p>\n The real impact of inflation eroding your income is best looked at over the course of years, as purchasing power normally decreases for consumer goods (with a few monthly exceptions over the past 20 years). However, cost-of-living adjustments don\u2019t always keep up with inflation.<\/p>\n The COLA measures the change in the CPI-W \u2014 the Consumer Price Index for Urban Wage Earners and Clerical Workers \u2014 between the previous year\u2019s third quarter average and the current year\u2019s third quarter average. This could go up, as it did this past year, or remain unchanged if there is no increase or if the number rounds to zero.<\/p>\n Try This: Here\u2019s Who Should Really Be Worried About Social Security Cuts<\/a><\/p>\n Although no one expects inflation to skyrocket monthly like it did during the pandemic, consumer prices continue to rise<\/a>. And we\u2019ve seen sharp inflation rate hikes just last year, when it rose steadily from April (2.3) to September (3.0), per Trading Economics<\/a>. A yo-yoing inflation in 2026 could hurt a pensioner\u2019s fixed savings and monthly income significantly.<\/p>\n More importantly, the things that retirees spend the most on, like health care and assisted housing than seniors, urban wage earners and clerical workers spend a lesser proportion of their income on. Typically, \u201cMedical care prices and overall health spending typically outpace growth in the rest of the economy,\u201d notes the Peterson-KFF Health System Tracker<\/a>.<\/p>\n Back in November, the Centers for Medicare & Medicaid Services (CMS.gov<\/a>) released a statement detailing, \u201cThe standard monthly premium for Medicare Part B enrollees will be $202.90 for 2026, an increase of $17.90 from $185.00 in 2025.\u201d<\/p>\n Premiums are a fact of life, but according to Medicare.gov<\/a>, while Social Security benefit payments can never\u00a0decrease\u00a0from one year to the next due to Medicare premium hikes<\/a> Part B premiums are automatically deducted from your Social Security benefit payment, making a 2026 $56 benefit check closer to $38 every month.<\/p>\n Although the COLA system is intended to preserve purchasing power, many seniors are falling behind because of the way that the adjustment is calculated. The problem? COLA is determined<\/a> using the aforementioned CPI-W, a Bureau of Labor Statistics (BLS)\u00a0index that monitors working individuals in urban areas, not strictly retirees.<\/p>\n The Senior Citizens League<\/a> argues that the CPI-W costs the average retiree thousands over the course of their retirement years. Unfortunately for Social Security beneficiaries, the better-performing CPI-E \u2014 the Consumer Price Index for the Elderly \u2014 has been recommended to Congress numerous times in the past three years, but each bill has been met with resistance.<\/p>\n More From GOBankingRates<\/p>\n This article originally appeared on GOBankingRates.com<\/a>: Your Social Security Check Increased by About $56 This Year \u2014 Here\u2019s How Much Inflation Has Already Eaten Away<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"First introduced in 1975, the cost-of-living adjustment (COLA) system is intended to help beneficiaries \u2014 retirees who receive…\n","protected":false},"author":2,"featured_media":214692,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,3204,11529,229343,147,530,733,1552,29347],"class_list":{"0":"post-503384","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-cola","10":"tag-consumer-price-index","11":"tag-disability-insurance","12":"tag-personal-finance","13":"tag-personalfinance","14":"tag-social-security","15":"tag-social-security-administration","16":"tag-supplemental-security-income"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/503384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=503384"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/503384\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/214692"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=503384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=503384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=503384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}