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Video: The 2026 Social Security COLA & What It Means
Like all Social Security recipients, Linda Ferragut will get a 2.8 percent boost in her monthly benefits in 2026, due to the annual cost-of-living adjustment (COLA). But she’s not exactly celebrating.
The COLA increase “is not even going to cover [changes in] your grocery store [bill], the way it’s gone up over the last year,” says Ferragut, a North Carolina retiree in her late 70s. “Inflation has gone to ridiculous heights.”
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She’s not alone in feeling the squeeze on a fixed income. In an AARP survey conducted in September 2025, a month before the 2026 COLA was announced, 77 percent of older adults said a 3 percent increase for 2026 would not be enough to help them keep up with rising prices.
“On average, prices have risen about 25 percent since the beginning of 2021,” says Ted Rossman, a senior industry analyst at Bankrate. “That is what’s straining household budgets — price increases on top of price increases, and wages largely haven’t kept pace.”
Ferragut, who is visually impaired and lives on her Social Security and a portion of her ex-husband’s pension, says she’s had to get resourceful to deal with the cumulative price hikes — from finding two-for-one deals at the grocery store to renting out a room in her house for extra income.
The 2.8 percent increase for 2026 amounts to about $56 more a month for the average retired beneficiary. If that feels skimpy, there are many simple steps you can take to lower your expenses or earn a little extra cash — or both — and make the COLA go a bit further.
“You can’t control the cost-of-living adjustment from Social Security, but you can control your personal savings,” says Mike Lynch, managing director of applied insights at Hartford Funds.
“Develop a budget, and try to stick to it,” he says. “Identify nice-to-haves versus needs, and cut back where you can.”
Here are five tips to help you compensate for a COLA shortfall.
1. Grab every available discount
Use frequent-shopper cards from grocery stores and other retailers to take advantage of store discounts. Keep an eye out for digital coupon programs to save even more.
App can also help you cut costs, particularly on groceries, says Trae Bodge, a smart-shopping expert at TrueTrae.com. In addition to using your supermarket’s own app to scout deals, she recommends Flashfood, which partners with grocery chains to identify items nearing their best-by date and sells them for up to 50 percent off. Other savings apps include Ibotta, which offers cash-back deals from thousands of retailers, and Flipp, which helps locate deals before you shop.
And here’s a low-tech option: Find out if your local supermarket has discount days or hours for older customers. Several national and regional chains take 5 percent to 10 percent off the total bill for shoppers age 60-plus (in some cases, 55-plus) on a designated day, often a Tuesday.
2. Get rewarded for everyday spending
You can reduce the net cost of your groceries and other expenses even more by using a cash-back card to pay for your purchases. “As long as you pay off your balance in full every month, so you avoid interest charges, it’s free money,” Rossman says.
Many cash-back cards focus on set spending categories, such as travel or entertainment. Rossman says the simplest strategy is to sign up for one that gives you a flat 2 percent back for every dollar you charge, such as the Citi Double Cash card or the Wells Fargo Active Cash card. “It’s less work than juggling multiple cards with higher rewards in specific categories but lower rewards on others,” he says.
To earn more, Rossman suggests layering in one additional card that offers a higher reward on something you buy regularly, like groceries or gas, and use it exclusively for those bills while paying for everything else with the 2 percent card. For instance, he says, American Express’ Blue Cash Preferred Card gives you 6 percent back at supermarkets on up to $6,000 of purchases a year (but has a $95 annual fee after the first year).
Another option — one that avoids the risk of running up big credit card balances — is to use a cash-back debit card instead. Bodge recommends the PayPal Debit Card, which offers 5 percent back on up to $1,000 in spending on a category of your choice each month, and the Target Circle debit card, which gets you 5 percent off Target purchases.
3. Do the (side) hustle
About 22 percent of boomers are earning extra money through a side gig (or gigs), bringing in an average of $918 a month, according to a June 2025 Bankrate survey.
“The great thing about side hustles is that they’re age-agnostic,” says Kathy Kristof, founder of SideHusl.com, which researches and reviews companies offering freelance, flexible and remote work. “Potential employers don’t care how old you are; they just care whether you can do the job and get results.”
Ferragut, for example, rents out a room in her house through a company that helps place traveling nurses and other professionals in short-term lodging. She expects to increase her income by about 33 percent. “It's going to help tremendously,” she says.
Another approach is to leverage the skills you developed in your career by working as a consultant. Consulting and staffing firms such as GLG, Maven and Robert Half International can help you identify opportunities that fit your talents and experience, Kristof says.
You could also seek side gigs related to a hobby or passion. Animal lovers might advertise dog-walking and pet-sitting services to neighbors on NextDoor or through a national pet-care directory site like Rover, Kristof says. Love movies? Rent out your house to a production company via a site like Giggster.
Or look into getting paid for giving your opinion. FindFocusGroups is an online directory of market research opportunities paying $50 or more an hour, according to SideHusl. If you have a chronic condition or are a caregiver for someone who does, Kristof recommends Rare Patient Voice, which pays an average of $120 an hour for feedback on medical products and services.
4. Refinance high-interest debt
A spike in credit card debt is adding to the financial squeeze for many retirees who have turned to charging in recent years to cope with high prices. According to a November 2024 study from the Employee Benefit Research Institute, 68 percent of retirees report carrying a balance on credit cards, compared with 40 percent in 2022.
If you’re among them, refinancing that debt via a 0 percent balance-transfer card can lower your monthly payments and save you a bundle in interest. To qualify, you generally need a credit score above 670 — typically a manageable bar for boomers, who had an average FICO score of 746 in 2024, according to Experian. Just remember that the 0 percent interest rate is introductory (typically lasting between six and 21 months); if you carry a balance beyond that, the interest can quickly pile up again.
Other options for refinancing high-rate credit card debt include paying off your balance with a home equity line of credit. (Interest rates ranged from around 5 percent to 12 percent in October, according to Bankrate, compared with around 20 percent for the average credit card.)
Refinancing works in the long run, though, only if you don’t run up your cards all over again. “It’s important to figure out why you got into debt and come up with a payment plan you can stick to,” says Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. “Otherwise, you’re just compounding the problem.”
5. Negotiate better deals
Inflation has also spilled into insurance rates. The national average cost of full-coverage car insurance is expected to tick up 4 percent by the end of 2025 and could rise by 7 percent if prolonged tariffs lead to higher losses for insurers, an Insurify study found. The cost of homeowner’s coverage has been soaring as well.
Yet nearly 60 percent of boomers fail to look for lower rates when their auto policies come up for renewal, and more than half don’t get competing quotes for homeowners insurance, according to recent LendingTree data. Surveys by the company show that most people who comparison-shop end up saving money. You might also save by getting home and car coverage from the same insurer; many companies give discounts to customers who "bundle."
To further reduce the cost of auto coverage, McClanahan recommends checking that your policy accurately reflects your driving habits — many people drive less when they stop working, and that can reduce your rates. You can also lower premiums, typically by 5 to 10 percent, by taking an online defensive driving course such as AARP’s SmartDriver or AAA’s RoadWise.
On the home front, take advantage of discounts insurers offer for protecting your house against natural disasters, fire and theft. Steps such as adding storm shutters, reinforcing your roof, putting in more smoke detectors or installing a home security system can reduce your rates by as much as 20 percent, according to the Insurance Information Institute.
Some insurers also offer discounts of up to 10 percent if you’re retired and 55 or older, because people who spend more time at home are less likely to be burglarized and more likely to spot fires before serious damage occurs.
Another way to save: Review your subscriptions and streaming services to make sure you’re getting their best deal. Rossman recommends checking providers’ latest promotions, then calling their customer service line and asking to match that rate.
“You don’t get what you don’t ask for, and all of these price breaks can really add up,” he says.
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