Growing concern about middle-class retirement and Social Security COLA is not being fixed

Retirees now know that Social Security’s COLA for next year is 2.8% Payments to reflect the increase begin in January 2026, but the modest increase of $56 per month, on average, is unlikely to allay deep concerns about the program among people.

Many retired workers fear their actual costs will rise faster than they adjust, while those still in the workforce are grappling with greater concerns that Social Security won’t be there when they need it.

Many middle-class Americans fear that Social Security will no longer exist

The Transamerica Center for Retirement Studies’ new report on middle-class Americans finds that nearly half of those in their 50s and 60s cite “social Security being reduced or ceasing to exist” among their greatest concerns about retirement, with 4 in 10 expecting the program to be their primary source of income. This reliance, combined with years of headlines about solvency issues and political debates, is fueling persistent anxiety about retirement planning.

Then there are concerns about inflation. The annual COLA is designed to track price increases, but many older families say it does not reflect the prices they actually face (health care, transportation, housing, food, utilities). In fact, the Senior Citizens Association estimates that retirees have lost meaningful purchasing power since 2010, leading to a widespread feeling that 2.8% is “not enough” amid rising necessities. While cola certainly helps, it still feels like treading water for many.

How Social Security anxiety changes retirement strategies

If you’re concerned about Social Security being inadequate, you can direct your concerns into action. Here are some constructive moves that experts often suggest:

• Stress test your plan (and write one if you don’t have one): Think about what a 10% to 20% benefit cut would do to your retirement budget. If your budget is still working, you’ve built in some flexibility. Transamerica also points to a gap in planning: Only a quarter of people in their 60s have a written retirement plan.
• Delay the claim if possible: Each year you wait past full retirement age (usually age 67) until age 70 increases your permanent benefit, which can help offset future policy or inflation surprises. Pair a later claim with part-time work, if possible, to reduce early portfolio withdrawals.
• Continue to build non-Social Security income: Maximize 401(k), 403(b), or Individual Retirement Account (IRA) contributions and employer matches (plus catches if you’re over 50) so more of your retirement budget comes from savings, not just Social Security.
• Diversify sources of income: Blend guaranteed income (Social Security, i.e. retirement income) with market assets and, when appropriate and with the advice of a financial advisor, use home ownership strategies such as a reverse mortgage.
• Coordinate withdrawals and taxes: Plan your claim along with Roth conversions, RMDs, and Medicare brackets. Smart sequencing can raise after-tax income more than a modest COLA ever could.

Bottom line

The 2.8% COLA provides some relief, but it will not erase the underlying concern: that inflation, political uncertainty, and longer life expectancy may steadily erode Social Security’s purchasing power. The solution is not to panic, but to plan what you can. Delay your claim if you can, diversify your sources of income beyond Social Security, and test your retirement budget against lower benefits.