For many years, Social Security has been a financial lifeline for older US residents, disabled workers and retirees. Every year, beneficiaries wait for the COLA because it increases the benefit amounts based on change in inflation and living costs. But there are updates that Full COLA would not be applicable. Social Security is one of the expensive federal programs in the US and its trust funds are slowly running out of the money. According to long term projections, the program is paying out more than it collects in payroll taxes. If nothing changes then future retirees could face automatic benefit cuts once the trust funds become insolvent. To avoid this, experts and policy groups are proposing cost saving changes that aim to protect the program for future generations.
No More Full COLA Social Security For All?
The Committee for a Responsible Federal Budget suggests limiting the annual COLA increase for people who get the highest social security benefits. This does not mean ending COLA. It means adjusting how much of the increase higher income retirees can get. There is a proposal that caps COLA for top earners. But for some retirees who live longer and who face high medical costs, for them the smaller COLA or capped COLA increase could reduce their purchasing power later in the retirement.
No Full COLA Increase To Social Security – Overview
| Post Title | No More Full COLA Social Security For All? |
| Year | 2026 |
| Country Name | United States |
| Benefit Name | Social Security Retirement Payment |
| Managing Authority | Social Security Administration |
| New Proposal | Limiting COLA Increase for high income retirees |
| Who is Affected? | High income earners |
| Benefit | Trust Funds Solvency |
| Why this Change? | Benefits Sustainability for future retirees |
| Post Category | US Finance |
| Official Web Portal | www.ssa.gov |
What Is COLA?
The Cost of living adjustment is an annual increase that is applied to social security benefits to help beneficiaries to keep up benefits with inflation. COLA is based on changes in consumer prices that covers essentials such as housing, healthcare, food and transportation. For 2026, the COLA has been set at 2.8% and this increase of 2.8% is applicable to 75 million social security beneficiaries including retirees, SSI claimants, disabled residents and survivors. Under the current rules, everyone receives the same percentage of COLA increase regardless of how large their benefits and income are.
Why No More Full COLA In the US?
There is a proposal that the high income earners or high benefits earners will get a smaller COLA increase. It means that COLA Increase would be capped for such beneficiaries. The main reason for this change is the solvency of the trust funds. The Social security trust funds are depleting because people are living longer and collecting benefits for more years. If no reforms are made then future retirees could face automatic benefit cuts. Under the new proposal:
- All beneficiaries would still get COLA increases each year.
- High income retirees would face a cap on how much their COLA can increase.
- Low and middle income beneficiaries would not be affected as they would get Full COLA increase.
For example, If COLA is 2.0% and retiree is getting $50,000 per year in benefits then they would automatically get a COLA Increase of $1,000 per year. But under the new proposal, this increase would be capped and might be limited to $900 per year. This means the person still gets a raise but it would be slightly lower.
How the COLA Cap Would Be Calculated?
First, Social Security decides the yearly COLA percentage. Then they look at the retiree whose benefit is around the 75th Percentile. Then the COLA increase for retirees is calculated. For example, if a retiree gets $45,000 per year in their benefits and if COLA is 2.0% then the increase for them is $900 per year. That dollar amount becomes the COLA cap. So, $900 is the maximum COLA increase allowed for higher income retirees that year. Everyone below that cap gets full COLA. This Cap changes based on the age when people start their benefits.
FAQs Related To No More Full COLA Social Security For All?
What is a COLA Cap?
A COLA Cap is a limit on how much extra money higher income retirees can receive from the annual Social security COLA increase.
How is the COLA Cap decided each year?
The COLA Cap is based on the dollar COLA Increase received by beneficiaries around the 75th percentile of earners.
Who will be affected by the COLA Cap?
Mainly retirees who get higher Social Security benefits based on high lifetime earnings will be affected by the COLA Cap.
Why is this COLA Cap being proposed?
The COLA Cap is proposed to help future retirees as social security trust funds are depleting.
