Retirement Social Security

Social Security Benefits Have Been Quietly Losing Ground for a Decade - Here's the Latest Proof

Benefits aren't worth what they once were, and there's a big reason why.

By Maurie Backman , Edited by Laura Hohenstein

Updated May 29, 2026

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There's a reason relying too heavily on Social Security is one of the biggest retirement mistakes you can make. And it's not because those benefits are at risk of disappearing, which they're not. The worst-case scenario on the table right now is benefit cuts, and even those may be preventable.

Rather, the problem is that Social Security benefits are not well-protected against inflation, even though they're supposed to be. It's true that those benefits are eligible for a cost-of-living adjustment, or COLA, every year. But because of a big flaw in the current COLA formula, seniors on Social Security have been losing buying power for the past 10 years.

Here's how much seniors on Social Security have lost out on over the past decade, and how lawmakers can adjust the COLA formula to make things more fair for beneficiaries going forward.

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Social Security benefits have lost their buying power

Social Security benefits have been eligible for an annual COLA automatically since 1975. Prior to that, COLAs had to be voted in by Congress.

Despite being eligible for yearly COLAs, Social Security benefits have lost 13.7% of their buying power since 2016, according to a new analysis by the Senior Citizens League. The group also says that for benefits to recover that lost value, the average monthly Social Security check would need to increase by $295.85 a month — a roughly 15.8% raise.

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The problem with the current Social Security COLA formula

Social Security COLAs are based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The problem is that the CPI-W reflects the spending habits of urban wage earners, not retirees whose money is spent very differently.

The National Committee to Preserve Social Security & Medicare says that seniors ages 65 and over spend more than twice as much on health care as their younger counterparts. And seniors ages 75 and over spend almost three times more on health care than younger consumers.

Not only does health care spending tend to steadily rise with age, but health care costs have also consistently risen at a faster pace than most other costs measured by the CPI-W. That mismatch has created a situation where Social Security benefits have lost a significant amount of buying power over the past decade, despite the fact that they've gotten a COLA every single year.

A new COLA formula is sorely needed

The Senior Citizens League reports that 39% of retirees rely on Social Security for 100% of their income. Given that percentage, the group feels it's crucial that lawmakers consider an alternative means of calculating Social Security COLAs.

The option the Senior Citizens League advocates using is the Consumer Price Index for the Elderly, or CPI-E, which measures the spending patterns of older Americans specifically. By tying COLAs to the cost increases that directly impact Social Security recipients, seniors could see more money out of those annual raises.

In fact, the group estimates that changing to the CPI-E could add more than $12,000 to lifetime benefits for the average person who retired in 2024. The Senior Citizens League also says that, at a minimum, Social Security benefits should be guaranteed a minimum 3% COLA each year.

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Even a more generous COLA in 2027 may not go very far

In April, the CPI-W rose 3.9% on an annual basis. Following that increase, the Senior Citizens League raised its 2027 COLA projection to 3.9%.

In theory, a 3.9% COLA should be a vast improvement over the 2.8% raise Social Security benefits received at the start of 2026. In practice, though, a more generous COLA won't necessarily be helpful, because the same gap that cost seniors 13.7% of their buying power over the past decade will continue to exist.

Bottom line

Social Security COLAs are designed to help seniors keep up with rising costs. But if lawmakers don't make a change to the current COLA formula, seniors could continue to lose buying power over time. Given that many retirees don't have savings to supplement their monthly checks, that could put many seniors in a very difficult position if health care costs in particular continue to rise much faster than broad inflation.

If you're still working, it's important to understand that Social Security COLAs do not necessarily offer the inflation protection you might expect. It's crucial to take steps to secure that protection on your own. A big part of that could mean choosing the right investments for your retirement, both when you're trying to grow wealth and when you're in the stage of taking retirement plan withdrawals.

Stocks have historically done a good job of beating inflation over time. So you may want to make sure they have a place in your portfolio both during your working years and in retirement.

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