Can COLAs Really Keep Up With Inflation? Why I'm Not Relying on Social Security Alone in Retirement.

The Motley Fool

by newsfeedback@fool.com (Keith Speights)

February 15, 2026

AI-Generated Deep Dive Summary

Planning for retirement should begin long before you actually retire, and while Social Security is often seen as a key component of retirement income, its cost-of-living adjustments (COLAs) may not be sufficient to keep up with inflation. This means that relying solely on Social Security benefits could leave retirees struggling to maintain their standard of living in the face of rising costs. The COLAs, which aim to adjust benefits each year based on changes in the cost of goods and services, are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, this index may not fully account for the specific expenses faced by older adults, such as healthcare costs, which tend to rise faster than other inflation metrics. As a result, Social Security benefits may lose purchasing power over time, making it essential to diversify retirement income sources. The author emphasizes that while Social Security should play a role in retirement planning, it should not be the sole reliance. Instead, individuals should consider additional strategies, such as building a substantial savings nest egg, investing in retirement accounts like 401(k)s or IRAs, and exploring other income streams. Diversifying sources of income can help mitigate risks associated with inflation and ensure financial stability during retirement. This approach aligns with the growing recognition that retirement planning requires a multi-faceted strategy to adapt to economic uncertainties. For those nearing retirement, understanding the limitations of Social Security benefits is crucial. By recognizing that COLAs may not fully offset the effects of inflation, individuals can take proactive steps to secure their financial future. Whether through additional savings, strategic investments, or alternative income sources, diversification remains a key strategy for achieving long-term financial security. This perspective underscores the importance of comprehensive retirement planning and highlights the need to explore options beyond Social Security alone.

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Originally published on The Motley Fool on 2/15/2026