Social Security benefits are rising again, but probably not enough to offset healthcare costs
Some advocates for older Americans want the government to change the index used for this adjustment to one more tailored to their spending patterns.
In October 2026, Social Security recipients will receive their annual cost-of-living adjustment (COLA) to better reflect inflation, according to a news report. This COLA, which helps ensure the value of benefits keeps pace with rising prices, is set by the government based on the consumer price index for urban wage earners and clerical workers (CPI-W). However, experts argue that the COLA may not adequately address healthcare costs that many retirees face.
The COLA percentage increase depends on the annual inflation rate measured by the BLS, which released its September 2026 inflation data on the same date as the COLA announcement. The bump is expected to be larger than previous years, ranging from 3.4% to 3.6%. However, the COLA calculation has limitations, as it primarily reflects the spending habits of working-age individuals rather than retirees.
Healthcare costs, which consume a significant portion of Social Security benefits, are often underrepresented in the COLA calculation.
Critics argue that the CPI-W does not accurately represent the inflation faced by older Americans, who tend to spend more on medical care compared to working-age individuals. The Committee to Preserve Social Security and Medicare suggests that the CPI-E, an experimental index that better reflects the spending patterns of older people, could be a more suitable measure for determining cost-of-living adjustments.
However, transitioning to the CPI-E would require a larger survey sample and modifications to the existing process.
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