Medical Costs Outpace Social Security's 2.8% COLA for Seniors

Households led by someone 75 or older spend approximately 16% of their budget on medical care, compared to 3.8% for younger households. Medical prices rose 3.4% in the 12 months through February 2026. This increase exceeds the 2.8% cost-of-living adjustment (COLA) Social Security recipients received for 2026.

Social Security benefits are adjusted based on the CPI-W, which tracks the spending patterns of urban wage earners and clerical workers. The 2.8% COLA was established because the CPI-W rose 2.2% year over year through early 2026. While the general inflation rate is currently lower than the benefit increase, the higher rate of medical inflation specifically erodes the buying power of retirees.

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retirement planning

Born on January 1? Social Security treats you as turning 70 a month early — and you should claim by December to get every dollar

If you were born on January 1, 1958, Social Security will consider you eligible for your full age 70 benefit in December 2027 — not January 2028. That means the window to lock in your maximum monthly payment opens a month earlier than your calendar birthday suggests. Claim in December 2027, and your first payment arrives in January 2028. Wait to claim until January 2028, and you’ll miss one month of the highest possible benefit — permanently. Social Security treats anyone born on the first of the month as having been born in the prior month. For you, that makes December 2027 the last and best chance to start benefits at the peak rate. You can apply as early as September 2027, up to four months before your desired start date. When you do, specify that benefits should begin in December 2027. To prevent any misunderstanding, add this to the remarks section: “I do not wish to receive any retroactive Social Security benefits. I want my benefits to become effective with the first month of my age 70 eligibility (December 2027 because I was born on the first of January).” Do that, and your first check arrives in January — with no gap, no delay, and no reduction.

Producer Price Index (PPI) data shows business costs rose 0.7% in February alone and 3.4% compared to a year earlier. Federal Reserve officials kept the benchmark rate in a range of 3.5% to 3.75% in March 2026, citing elevated inflation. These factors, along with potential price increases from tariffs, may further reduce the remaining cushion provided by the 2.8% raise.

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retirement planning

Social Security could pay 24% less in six years — here’s what that means for your retirement

Social Security could only pay about 76% of scheduled benefits in six years, when the Old-Age and Survivors Insurance Trust Fund is projected to be exhausted, according to the Congressional Budget Office. That means monthly checks could drop by roughly 24% — about $18,400 less per year for a typical retired couple — unless Congress acts. The system would continue paying benefits using incoming payroll taxes, but without a reserve, it can’t cover the full amount promised. The shift to a pay-as-you-go model would leave millions of current and future retirees facing a stark shortfall. A 24% reduction in benefits would affect the financial security of current and future retirees who rely on Social Security as a primary income source.

Related Brief6h ago

retirement planning

Born on January 1? Social Security treats you as turning 70 a month early — and you should claim by December to get every dollar

Related Brief2d ago

retirement planning

Social Security could pay 24% less in six years — here’s what that means for your retirement

Medical Costs Outpace Social Security's 2.8% COLA for Seniors

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The Cassidy-Kaine Social Security Plan Would Fund Retirement Benefits With $170 Trillion in New Debt

A $13 million hack forces shutdown of Russia-linked Grinex exchange

Medical Costs Outpace Social Security's 2.8% COLA for Seniors

Read More Analysis

The Cassidy-Kaine Social Security Plan Would Fund Retirement Benefits With $170 Trillion in New Debt

A $13 million hack forces shutdown of Russia-linked Grinex exchange

The Ledger Morning

Read More Analysis

The Cassidy-Kaine Social Security Plan Would Fund Retirement Benefits With $170 Trillion in New Debt

A $13 million hack forces shutdown of Russia-linked Grinex exchange

The Ledger Morning

Read More Analysis

The Cassidy-Kaine Social Security Plan Would Fund Retirement Benefits With $170 Trillion in New Debt

A $13 million hack forces shutdown of Russia-linked Grinex exchange