As January 2025 nears its end, some folks are already planning ahead for 2026 and keeping their finances at the forefront.
For those living on a fixed income such as Social Security, a key part of financial planning may include keeping tabs on next year’s Cost Of Living Adjustment, and right now they’re looking pretty low.
Non-partisan group The Senior Citizens League is predicting a modest increase of about 2.1% in 2026, following 2025’s increase of 2.5% — the lowest COLA increase in years.
TSCL bases its prediction on inflation data collected by the Bureau of Labor Statistics Consumer Price Index — the same method the Social Security Administration uses to calculate COLA.
In December, TCSL predicted a 2026 COLA adjustment of 2.8% for 2026.
“In other words, cooling inflation could lead to the lowest COLA since the start of the COVID-19 pandemic,” the group wrote in a statement.
“… 2025’s COLA was a meager 2.5%, down from 3.2% in 2024 and a whopping 8.7% in 2023. The last time the COLA came in below 2.0% was 2021 when it was 1.3%,” the group said.
While slowing inflation is a good thing, the league warns that it doesn’t mean prices will fall but that they will just rise more slowly.
“This leaves many seniors facing a budget shortfall,“ the league said.
Shannon Benton, TSCL executive director, said inflation slowing down does not translate to seniors catching up.
Data from TSCL’s 2024 Senior Survey shows 62% of older Americans worry their retirement income won’t even cover essentials such as groceries and medical bills.
“It’s essential that Congress acts quickly to fix years of sub-par COLAs and help give seniors the quality of life they deserve,” Benton said.
The group added if President Donald Trump follows through with his plan to eliminate taxes on Social Security benefits, it could save seniors up to $3,000 a year — about 5% of a typical senior budget.
“The Trump Administration’s plan to eliminate taxes on Social Security benefits would make a massive difference,” Benton said. “The current thresholds used to determine if you’ll pay taxes on your benefits were set up back in the 1980s, and we’ve never adjusted them for inflation.”