Will The Recent Social Security Cost-Of-Living Adjustment Affect Your Home Mortgage Payment?

Estimates for next year's Social Security cost-of-living adjustment (COLA) are up to 2.7% in September, according to sources like The Motley Fool and The Senior Citizen's League. This essentially means that retirees who receive Social Security benefits will get an average of approximately $54 extra each month in 2026 to help them manage the rising costs of everyday expenses, which continue to climb thanks to accelerating inflation rates. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) has increased 2.9% in the twelve months ending in August 2025. This means that prices for things like food, electricity, and auto repair have all increased significantly in the last year. However, there's one notable expense that Social Security beneficiaries might have on their monthly budget sheet that isn't increasing in cost, and that's their normal payments on their pre-existing fixed-rate mortgages.

Next year's Social Security COLA doesn't tie into retirees' average mortgage payments, and won't affect the amount of your monthly payments. In almost all circumstances, the terms of your mortgage contract are fixed unless you opt for refinancing your mortgage. However, the COLA does increase the income of Social Security beneficiaries, and could therefore theoretically make it easier to make your mortgage payments. However, the reality is that the predicted 2.7% COLA doesn't actually match the 2.9% inflation and CPI increase. In other words, the average cost of living is increasing at a higher rate than the Social Security payouts are, so you might actually have less money to put toward your mortgage. Inflation, though, will decrease the real value of your mortgage debt, which can sometimes still be beneficial.

The "real value" of your mortgage is effectively the inflation-adjusted value of your home loan. So, as inflation continues to increase, the value of the mortgage debt begins to look better and better in real terms, because the spending power of each dollar continues to decrease. In short, money doesn't go as far as it once did, so the mortgage continues to look like a smaller debt over time, relative to the average cost of a home, and relative to the cost of your other expenses, which continue to rise as the CPI goes up. So, as your Social Security income goes up with each new COLA, your ability to repay debt should theoretically improve. The reality right now, though, is that increasing costs of living are likely to eat up the extra money you get each month from the new COLA. As mentioned before, this is because costs are rising faster than the COLA. If you have other investments though, such as stocks and bonds that are increasing at a higher rate than the CPI, this may not be an issue.

The projected 2.7% COLA for 2026 is slightly higher than last year's 2.5% increase, though admittedly nowhere near the adjustments seen in other years earlier within this decade. The official 2026 COLA rate increase will be announced in October. Interested in getting a new home? Here's what you need to know about getting a mortgage. Additionally, make sure to read up on how aging can make it harder to get a mortgage and what to do about it.