Social Security's Silver Lining Will Be Missing in 2026, and That's Potentially Terrible News for Up to 30 Million Retirees | The Motley Fool

In November, over 70 million people received a Social Security benefit, more than 53 million of whom are retired workers. For most of these retirees, Social Security income isn't a luxury -- it's a necessity. In 2023, Social Security lifted 22 million Americans above the federal poverty line (including 16.3 million adults aged 65 and over), which is more than any other social program. It's also responsible for lowering the poverty rate for seniors aged 65 and above to 10.1% (as of 2023) from an estimated 37.3% if the program didn't exist. For retired-worker beneficiaries, few announcements are more anticipated than the annual cost-of-living adjustment (COLA), which allows them to calculate how much they'll receive on a monthly basis for the upcoming year. While the prospect of a larger payout tends to put a smile on the faces of Social Security's traditional beneficiaries, up to 30 million retired workers may be primed for a massive disappointment in the new year . Image source: Getty Images. Social Security's 2026 COLA has historical significance Social Security's highly publicized cost-of-living adjustment is the near-annual raise that's passed along to beneficiaries to offset the effects of inflation (rising prices). For instance, if the cost to purchase a broad basket of goods and services rises by 2% from one year to the next, Social Security checks would have to increase by the same percentage to avoid a loss of purchasing power. Since 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has served as the price-tracking yardstick for America's leading retirement program. On Oct. 24, nine days later than initially scheduled due to the federal government shutdown, the Social Security Administration revealed the 2026 COLA would be 2.8% , which was more or less in line with independent estimates leading up to the announcement. On a comparative basis, the 2.8% raise for the upcoming year is modestly ahead of the 2.3% average increase in benefits since 2010. Next year's raise also holds historical significance. The new year marks the fifth consecutive cost-of-living adjustment totaling at least 2.5%. It's been 29 years (1988 through 1997) since Social Security beneficiaries have witnessed their monthly checks climb by at least 2.5% for five straight years. While Social Security COLAs of 5.9%, 8.7%, and 3.2% from 2022 through 2024 were higher on a percentage basis, the nominal-dollar impact of a 2.8% boost to benefits will be felt. In May 2025, the average monthly retired-worker benefit surpassed $2,000 for the first time in the program's 90-year history. In 2026, the average retired worker can expect their monthly payout to increase by $56 to $2,071. Meanwhile, a 2.8% cost-of-living adjustment is expected to translate into an average increase in benefits of $44/month for both workers with disabilities and survivors of deceased workers in 2026. Image source: Getty Images. Social Security's silver lining is missing for up to 30 million aged beneficiaries in the new year In an ideal world, the CPI-W would perfectly capture the inflationary pressures...

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