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Fed Rate Cuts Threaten Social Security COLA Adjustments

1/9/2026

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Summary

Story summary

Fed rate cuts could shrink Social Security cost-of-living adjustments, with the rate seen at 3.5%–3.75% in 2026 and a COLA as low as 2.1% in 2027.
Lawmakers consider replacing CPI-W with CPI-E to determine COLAs; this could raise benefits but would deplete the Social Security Trust Fund faster.
Some lawmakers seek to eliminate Social Security taxes, though the move could have negative financial implications.

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Story summary

Fed rate cuts could shrink Social Security cost-of-living adjustments, with the rate seen at 3.5%–3.75% in 2026 and a COLA as low as 2.1% in 2027.
Lawmakers consider replacing CPI-W with CPI-E to determine COLAs; this could raise benefits but would deplete the Social Security Trust Fund faster.
Some lawmakers seek to eliminate Social Security taxes, though the move could have negative financial implications.