A FINANCIAL expert has advised Social Security recipients to remember a specific clause amid cost-of-living adjustment estimates.
Over 74 million Americans receive benefits from the Social Security Administration (SSA) every month from one of several programs.
Social Security recipients will see the COLA for 2026 in just months (stock image)[/caption]
CFP Jay Zigmont (pictured) said they should keep a crucial clause in mind[/caption]
These could include monthly Social Security payments, Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), or several others.
To ensure that the benefits distributed to Americans can appropriately help support them in the current economic landscape, the cost-of-living adjustment (COLA) is made every year in October.
The COLA takes inflation and other data into account to determine how much more money recipients will get in their monthly checks for the following year.
Specifically, the SSA references the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to help estimate what the COLA will be throughout the year.
When making the final determination, it will look at the third quarter, or the “average of CPI-W for July, August, and September” of 2025, according to what founder and CEO of Childfree Wealth and Childfree Trust, Jay Zigmont, told The US Sun recently.
“Any estimates of the COLA for 2026 are currently speculative,” Zigmont emphasized.
“We are all waiting to see how tariffs and the current political environment impact inflation.”
Except, given the information thus far, the financial expert said it’s “probably a good guess that the 2026 COLA will be at or above 2.7%.”
Should that be the case, it would be only a 0.2% uptick from this year’s, which was determined in October 2024 to be 2.5%.
PREMIUM POINT
Given that the expected COLA increase would be so small, it’s expected that Medicare Part B premiums, which also go up at the same time, could be higher.
Zigmont said that this wouldn’t cause any issues, however.
“Fortunately, there is a hold harmless clause that says if Medicare Part B goes up more than the COLA, your Social Security benefit will not go down,” he explained.
“It’s nice that your benefit won’t decrease, but the prices of everything else are also rising, meaning you have less purchasing power.”
Again, estimates for the COLA will likely fluctuate several times before it’s finally determined.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here’s how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
- 401(k) Plans
- A 401(k) is a retirement account offered through employers, where contributions are tax-deferred.
- Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings.
- Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority.
- IRAs
- An Individual Retirement Account (IRA) offers another avenue for retirement savings.
- Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices.
- Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.
CHANGE COMING
Social Security recipients are also seeing massive changes starting this summer as SSA Commissioner Frank Bisignano makes efforts to streamline the federal agency’s operations.
Starting this month, for example, the My Social Security online portal will be available and “uninterrupted” 24/7, per a recent announcement.
Currently, select times during the week and weekends render the portal unavailable to beneficiaries.
Having the all-day access is a vital upgrade, as the portal is a resource for obtaining documents, replacing a Social Security card if lost or stolen, and estimating benefit amounts.
Starting September 30, paper checks from the SSA are also being eliminated, with fully digital distributions either through direct deposit to bank accounts or through debit cards.
The White House said in a statement that the mandate is being implemented to prevent fraud and reduce costs.
Data collected by the government showed that paper checks are around 16 times more likely to get stolen or lost.
US Treasury findings also note that the discontinuation of paper checks would save around $750 million annually.
ACT FAST
Social Security recipients must sign-up for direct deposit or a Direct Express Prepaid Debit card by the September 30 deadline.
This can be completed through the Go Direct website or by calling the Treasury Electronic Payment Solution Contact Center at 1-877-874-6347.
Payment issues have also left some Social Security recipients in a difficult spot recently.
A woman’s monthly distributions were slashed to $14 a month after a $12,000 error, for example.
A mother was also forced to pay back $43,000 after a “despicable” mistake.
