In 2016, the Consumer Price Index reported that consumer prices were down which in turn meant there was no need for a cost-of-living adjustment (COLA). That left Social Security checks unchanged from 2015.
That’s a big gap from a decade later, when retirees, disabled persons and survivors receiving benefits got a 2.8% cost-of-living adjustment.
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That means the average retired worker in January 2025, who received a monthly Social Security check of $1,976, according to the SSA data, would get a raise of $55.33 per month and $2,031.33 per year in 2026, if you do the math.
However, even a record high increase can feel like a small bump in pay in today’s economy. MoneyLion tapped finance experts to explain why the increase in the Social Security COLA for 2016 vs. 2026 appears different now.
The Real Value of COLA Then and Now
While the comparison appears favorable at first glance and may look like great progress, there are substantial differences between these two years that cannot be easily overlooked, said Cody Schuiteboer, president and CEO of Best Interest Financial.
“Social Security in 2026 is worth only 83.6% of its 2016 value despite receiving the cost-of-living adjustment every year during the last decade,” according to Senior Citizens League research, said Schuiteboer.
“In other words, the purchasing power of this type of benefit is 13.7% lower despite receiving annual raises,” he explained.
Inflation Is the Biggest Economic Factor
Inflation was so high in the years following the pandemic that many seniors relying on Social Security fell behind, said Melanie Musson, Insurance & Finance Expert at Clearsurance.com.
“Their benefit simply didn’t meet their needs, so, even though a 2.8% increase seems better than nothing, it’s only an attempt to catch up from a lap behind,” she said.
The other difference right now is what is being hit by inflation.
“The things that seniors depend on, like electricity and groceries, have increased in value. While housing costs are stable for seniors who own their own homes, the spending categories that affect seniors most are more expensive.”
Groceries
People are feeling the squeeze in grocery stores, where prices have climbed due to President Donald Trump’s tariffs — whether they are imposed or not. Food-at-home prices are forecasted to increase 3.4%, with a prediction interval of 2.2% to 4.7%, according to the USDA. Meat lovers are really feeling the pinch as veal and beef prices are expected to increase by 12.1%, added the USDA.
Medicare Part B
Seniors are being hit hard this year where it matters most: in healthcare costs. Medicare Part B premiums as a percentage of annual Social Security income will reach the historic maximum level at 9.4% in 2026, noted Schuiteboer.
“The Part B premiums will be increased by 9.7% annually, which is almost 3.5 times higher than the 2.8% cost-of-living adjustment according to Social Security and Medicare policy analyst Mary Johnson,” he added. “Consequently, about a third of a $56 average monthly COLA increase is required to pay a $17.90 increase in Medicare premiums, leaving the retiree with the net monthly increase of just $38 or $456 per year.”
Travel and Gas
“The price for travel grew by 7.8% year-over-year in April 2026, which is double the current 3.8% rate of the cost of living rise,” said Schuiteboer. “The price for gasoline soared by 28.4% over the year, while air ticket pricing climbed 20.7%,” he added.
The Shift of Spending Habits
As more products and services become available, people are changing their buying behavior in the name of convenience and to keep up with the times. Here are some of the services that are decreasing the value of the dollar, compared to earlier years.
Technology
Today, seniors depend more on cell phones and the internet, said Musson, which is an added expense they may not have incurred 10 years ago. Many retirees want to stay connected to friends and family and share photos and videos of their travels and memorable moments.
Plus, many seniors who have opted for streaming services over cable need to pay for Wi-Fi in addition to their streaming subscriptions may see costs increase every year.
For example, in 2026, a Hulu subscription that includes Live TV, Disney+, and ESPN Select with ads runs $89.99 per month, and $99.99 for an ad-free subscription. However, ESPN Select isn’t available without ads and will still cost $100 for the bundle. That is just for one streaming network.
Meal Subscription Boxes
Meal subscription boxes can provide healthy chef-prepared meals when you don’t have the time or inclination to cook. Although they may offer promotional discounts to join, they can be expensive.
Plus, many food delivery apps like Uber Eats and DoorDash add high service fees and delivery fees (that don’t include the tip) for the convenience. These fees can add 15% to 30% to your subtotal, according to Triangle University.
What’s in Store for 2027
Looking ahead to the 2027 cost of living increase, which the Senior Citizen’s League expects to be around 3.6%, seniors may still not feel any relief. Daily expenses are not reflected in government reports and add up faster than ever with no recourse for mid-year inflation fluctuations which have become more volatile in recent years.
TSCL Executive Director Shannon Benton said, “Frankly, it’s infuriating that seniors must wait for a COLA to catch up with prices that have already driven up their grocery bills, housing costs, healthcare expenses and insurance premiums.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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