Why Middle-Class Retirees Still Worry Despite COLA Increases

Core Insights - The Social Security cost-of-living adjustment (COLA) for 2026 is set at 2.8%, translating to an average increase of $56 per month for retirees, but this modest increase may not alleviate deeper concerns regarding the program's sustainability [2][4] - A significant portion of middle-class Americans, particularly those in their 50s and 60s, express fears that Social Security benefits may be reduced or cease to exist, with 40% relying on it as their primary income source [3][4] Group 1: Concerns About Social Security - Nearly half of middle-class individuals in their 50s and 60s list the potential reduction or elimination of Social Security as a major retirement concern [3] - 39% of middle-class Americans fear that Social Security benefits will be cut in the near future, reflecting a broader skepticism about the adequacy of the 2.8% COLA amidst rising living costs [4] - Many retirees believe that annual COLAs do not keep pace with their actual expenses, leading to a sentiment that the 2.8% increase is insufficient [5] Group 2: Impact of Inflation and Cost of Living - The COLA is intended to adjust for rising prices, but many older households feel it does not accurately reflect their specific cost increases in areas such as healthcare and housing [5] - The Senior Citizens League reports that retirees have lost significant purchasing power since 2010, contributing to the belief that the 2.8% adjustment is inadequate [5] Group 3: Retirement Planning Strategies - Experts recommend stress-testing retirement plans to assess the impact of potential reductions in Social Security benefits, with only 25% of individuals in their 60s having a written retirement plan [6] - Delaying Social Security claims can increase permanent benefits, which may help mitigate future financial uncertainties [6] - Building non-Social Security income through retirement accounts and diversifying income streams can enhance financial security in retirement [6]