Boomer? Homeowner? Read this!
How a Modest 2026 Social Security COLA Could Reshape Retirement and Real Estate for Boomers
The projected 2.4% Social Security cost-of-living adjustment (COLA) for 2026—the lowest in years—raises concerns for boomer homeowners. This modest increase may not keep pace with rising housing costs, potentially impacting retirees' financial stability.
Many boomers rely heavily on Social Security, with nearly 40% depending on it for at least half of their income. A lower COLA could strain budgets, especially as housing expenses continue to climb. This financial pressure might prompt some retirees to consider downsizing or relocating to more affordable areas.
The housing market could see shifts as a result. An increase in homes for sale from downsizing boomers might affect inventory levels and pricing dynamics. Additionally, areas with lower living costs may experience heightened demand, influencing regional housing trends.
For retirees, proactive financial planning becomes crucial. Exploring options like reverse mortgages, home equity loans, or relocating to cost-effective regions can help manage expenses. Staying informed about market trends and seeking financial advice can also aid in navigating these challenges.
In summary, the anticipated low COLA for 2026 underscores the importance of strategic financial planning for boomer homeowners. Adapting to these changes can help maintain financial well-being in retirement.
Homeowners who rent out their properties—especially those in or nearing retirement—may also feel the effects of the low projected 2.4% Social Security COLA in 2026. For these individuals, rental income is often a vital supplement to their fixed income. However, if tenants, many of whom are also retirees or on limited incomes, feel squeezed by inflation and rising costs, landlords may face pressure to limit rent increases or risk vacancies.
This dynamic can make it harder for older landlords to keep up with increasing property taxes, insurance premiums, and maintenance costs—all of which continue to rise faster than the COLA. As a result, some may find their rental properties becoming less profitable or even a financial burden. Those with mortgages on their rental homes may be particularly vulnerable if their loan terms involve variable rates or balloon payments.
In response, some boomer landlords might consider selling their rental properties to reduce risk and access equity. Others may seek to shift to shorter-term or seasonal rentals in tourist-friendly areas where returns can be higher, though this comes with additional management responsibilities and risks.
Overall, the tight margins caused by a modest COLA could lead many retiree landlords to rethink their long-term real estate strategies.
