The letter comes every autumn, on official paper. It announces the raise. The cost-of-living adjustment, or COLA, is meant to keep the check even with prices.
This year the raise was 2.8 percent. On the average retired worker’s check, that is about fifty-eight dollars a month. Then Medicare took seventeen dollars and ninety cents of it back, before the first grocery run.
So the check goes up on paper. It buys a little less at the register. That is not a one-year story. Over the last ten years, the average benefit has lost about fourteen percent of what it could buy. Thirteen point seven percent, to be exact. For every dollar your check covered a decade ago, it now covers about eighty-six cents.
The reason is buried in the formula. The COLA tracks the prices of working city households. A seventy-year-old spends on a different list. Retirees spend more on the two lines that climb fastest, health care and housing. The index gives those less weight than the life you are living does.
Faced with a raise that shrinks, the cohort does something predictable. The instinct flips from growing the money to keeping it. The back half of retirement is a long shift toward preservation.
Where the cohort’s money sits, and the shift that starts once the paycheck stops growing.
The squeeze reads two ways at once.
What the check buys
A 2.8 percent raise, minus Medicare, against a senior basket that has outrun the COLA for a decade. The gap is a pay cut no one voted for.
Where the money moves
Out of growth and into preservation. The cohort shifts toward protecting capital. A whole industry sells the tools for it, from annuities to metals.
So who profits when a generation moves from growing money to guarding it?
The gold ads leave out the part that matters most. The metal sold as safety pays no interest, no dividend, nothing while you hold it. Gold sits near four thousand dollars an ounce today, well below its January peak above five thousand five hundred. It can protect a portfolio. It can also fall hard. And the firms that shout loudest usually sell fear along with the coin.
The arithmetic
COLA of 2.8 percent for 2026 and average benefits: The Senior Citizens League and the Social Security Administration, 2026. Loss of buying power near fourteen percent over ten years: TSCL 2026 Loss of Buying Power report. Medicare taking about $17.90 of the 2026 COLA: TSCL, early 2026. Gold near four thousand dollars an ounce, off its January peak: spot data, late July 2026. COLA based on CPI-W rather than a senior index: SSA methodology.
My mother-in-law still reads that COLA letter at the kitchen table every year. She does the math in her head before I can find a calculator. The raise is real, and so is the ground it keeps losing. Watch that gap between the check and the cart. It is the pressure that pushes a whole generation toward anything that promises to hold its value. Just know what the promise costs before you reach for it.
Andrew
Boomers Trade is written by someone getting older right alongside you, and watching who profits from it.
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