Because so many people rely on Social Security to make ends meet in retirement, the program’s annual cost-of-living adjustments (COLAs) are an important piece of the puzzle. The purpose of Social Security COLAs is to help ensure that seniors don’t lose buying power over time as inflation leads to higher living costs.

In recent years, Social Security’s COLAs have been notably generous. This year’s 3.2% COLA was above average over the past decade, and 2023’s 8.7% COLA was a record-breaker.

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But in 2025, Social Security benefits will be rising by only 2.5% due to cooling inflation. And while that’s not a terrible increase, it’s disappointing in the context of recent COLAs that have been far more generous.

But as upset as seniors may be about a 2.5% COLA, there’s a chance 2026’s Social Security raise will be even lower. And that’s something beneficiaries should gear up for now.

Why the news may not be that great in 2026

In the absence of a crystal ball, it’s hard to know what the coming year will look like, economically speaking. But what we do know is that inflation has been cooling steadily all year long. And there’s a good chance that’ll continue into 2025.

The Fed seems pretty confident that inflation is trending in a slower direction, too. At its mid-September meeting, it slashed its benchmark interest rate by half a percentage point. And more rate cuts are expected in short order.

Slowing inflation has the potential to be a good thing not just for seniors on Social Security, but for consumers as a whole. But if inflation continues to cool in the new year, it could lead to an even smaller Social Security COLA than 2.5% for 2026.

Don’t be too reliant on Social Security COLAs

It can be argued that a smaller Social Security COLA isn’t a bad thing because it’s a sign that inflation is easing. But in reality, many seniors have a hard time seeing things that way — especially since Social Security COLAs have long failed to keep up with inflation.

The best bet, therefore, is to take steps to be less dependent on Social Security COLAs through the years. If you’re already retired and therefore can’t go back in time and build up retirement savings, try boosting your income with a part-time job or gig work. You may find the latter to be extremely flexible.

A job might also give you something to do during the week that doesn’t cost you money. That makes a limited income easier to stretch.

And if you’re not yet retired, consider this a wake-up call to build as large a nest egg as you can so you don’t have to worry about Social Security COLAs year after year once you stop working. Even a modest nest egg could provide a cushion, so that if there’s a year when Social Security benefits barely get an increase, you won’t be left struggling.

Even if you’re only able to save $100 a month for retirement, if you do so over 30 years and earn an average annual 8% return in your portfolio, which is a bit below the stock market’s average, you’re looking at $136,000.

Saving more than that would obviously be optimal. But if not, that still gives you a modest sum of money to dip into for when Social Security’s COLAs inevitably fall short.

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