Nearly One-Third Cut Back on Essentials Amid Rising Costs

Rising costs are cutting into necessities for Social Security recipients, according to a new report.

According to a new Nationwide survey of retired Social Security recipients, more than half are cutting discretionary spending. Pinching pennies and cutting frivolous spending as costs rise across the board isn’t unusual. However, over one-third of retirees reported having to cut even further, reducing spending on essentials, like medical costs and groceries.

Each year, the Social Security Administration adjusts benefits to contend with inflation. The projected cost-of-living adjustment (COLA) for 2026 is 2.7%. However, it may not be enough for many older Americans to live off, as COLAs aren’t predictive, but are instead based on past data. 

Benefits Are Not Keeping Up With Inflation

More than 60% of retired Social Security recipients believe rising tariffs will drive inflation beyond what COLAs can cover, according to Nationwide.

“It is safe to assume that many retirees will continue to struggle with covering the cost of basic living expenses as inflation for these expenses will exceed the projected 2.7% COLA increase to Social Security,” said Imelda Padilla-Frausto, a research scientist at the UCLA Center for Health Policy Research.

Between 2010 and 2024, COLAs increased recipients’ Social Security benefits by 58%, while inflation increased seniors’ expenses by 73% in the same time frame, according to research by The Senior Citizens League.

As a result, millions of retirees are left trying to decide where to cut corners and where to stretch their dollar.

“A low COLA, like the 2.7% being projected for 2026, will mean [retirees] are losing buying power and will need to scale back on expenses, dip into their savings more (if they have savings), or seek assistance with basic living expenses,” Padilla-Frausto said.

How To Budget If Your Social Security Benefits Aren’t Enough

Padilla-Frausto recommends that retirees use resources like the Elder Index to gauge how much income they need for essential costs such as housing, food, health care, and transportation as they plan where to make cuts.

Certified financial planner Jason Fannon also believes reviewing monthly expenses–especially discretionary ones–is the first step to limiting the financial stress of inflation.

“We can’t control increases to Medicare premiums or the grocery prices, so we have to make sure we remain flexible in our financial situations,” Fannon said.

For those looking to alleviate some of the inflation pressure without cutting into necessities, Fannon suggests considering a couple of options:

• Split bulk home essentials purchases, like toilet paper and cleaning supplies, with others.
• Look for ways to decrease monthly expenses you can’t fully cut, like looking into reduced insurance premiums or health insurance costs.
• Take on a part-time job if you’re able.
• Invest in large-cap common stocks.

“Think of ways to cut back on spending that won’t impact your health,” Fannon said.