Even a Shutdown Can’t Stop the Social Security COLA

COLA, then, will also be calculated that day, Shedden said, much to the relief of the millions of Americans who rely on Social Security checks to help fund their retirements.

“No other releases will be rescheduled or produced until the resumption of regular government services,” BLS said in a statement. “This release allows the Social Security Administration to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits.”

Shedden, who took the opportunity to speak more broadly with ThinkAdvisor about the program’s uncertain future, remains optimistic that Congress will act to stave off benefit cuts that are expected in the early to mid-2030s. She believes that the political cost of not “saving” the program would be too high for either party to bear.

“You can see the political power of Social Security in the fact that the BLS is doing what it takes to make the COLA calculation and announcement even though the rest of the government is shut down,” she said. “It’s a program that has more support than pretty much any other issue in Washington.”

Here are some additional highlights from our conversation, edited for length and clarity:

THINKADVISOR: We recently spoke with Social Security expert Marcia Mantell about her overall view of the program, and she said she’s never been more concerned about its future. How are you feeling as we await the delayed 2026 COLA announcement?

MARHA SHEDDEN: I definitely agree with her on that. I am an optimist by nature, but I would say that I’m very concerned about Social Security and the millions of older Americans who rely on the program. But like Marcia, I’m also confident that the program is here to stay and that retirees can depend on the benefits they have earned.

I’ve been educating people about Social Security for 15 years now. From the beginning, I have always tried to look back at the program from a historical perspective. This is a program that is now 90 years old, and it’s been remarkable to see how well it has been able to adapt and develop with the times.

The fact of the matter is that Congress has a lot of potential paths forward for constructive reform. If you look at all the rules and twists and turns in the program, there are a lot of levers that could be pulled to address the funding shortfall that we all talk about so frequently.

As we have previously discussed, I think we can expect a package of reforms and changes will be needed to set the program up for the next 90 years. I don’t see that happening in the next several years, however, and that is unfortunate.

THINKADVISOR: Speaking of reforms, are there any bills in Washington regarding Social Security that you either like or dislike? Some of the ones we’ve reported on lately include the WISH Act, which would create a Social Security-administered long-term care benefit funded via payroll taxes. There’s also the Hands Off Social Security Act that would require congressional approval of any major changes to benefits or services. What are you watching?

SHEDDEN: That’s a good question, and yes, I like to keep track of as many of them as I can, even though it’s hard to imagine any of the more ambitious pieces of legislation getting anywhere in the current environment.

You mentioned the WISH Act. I think that’s a wonderful idea, frankly, because we see in survey after survey that retirees are so terrified of the possibility of health care costs and long-term care just wrecking their retirement savings. It’s a legitimate fear that so many people are grappling with.

Another piece of legislation I really like is the Claiming Age Clarity Act. That bill would change the nomenclature for the claiming ages 62, 67 and 70 to be called the “minimum,” “standard” and “maximum” benefit ages. The current nomenclature is far less clear about how claiming early affects your monthly benefit amount.

I interviewed Jason Fichtner earlier this year about the topic, and he was also very supportive of this idea. In fact, he’s been working on the issue of unclear language and messaging from the Social Security Administration ever since his time helping to run the organization. We both agreed that this legislation could really make a big difference in beneficiary outcomes without costing the program anything.

The other policy push I would highlight is the idea of linking the annual COLA to an inflation measure that more closely matches the spending patterns of seniors — namely the higher health care costs they face compared with the general population. That’s always been something I’ve been in favor of.

THINKADVISOR: How are you feeling about the upcoming COLA announcement for 2026? Have you seen a delay like this before that you can recall?

SHEDDEN: You know, I was reflecting on this, and we have seen prior shutdowns delay the COLA before. The only other time I can recall that the annual COLA announcement was delayed was in October 2013, also during a government shutdown. But that was only a short delay.

I’m very glad that the BLS leadership has taken the decision to bring in the necessary staff to get this done, because it is just so critical for the retirement security and peace of mind of so many beneficiaries. We’re still in a moment of heightened inflation, so seniors rely on the COLA to maintain their spending power.

In a way there is a positive message to be derived here, because it really was the political power of Social Security that pushed the administration to make this happen. It’s a positive sign about how political forces in Washington are supportive of the program, even amid so much disagreement and uncertainty.

THINKADVISOR: What else are you thinking about with respect to the Social Security program and its role in Americans’ retirement security?

SHEDDEN: As I said, I’m optimistic about the future of the program. That said, all of this is just another message to workers that they need to be proactive in preparing for retirement. We’re living at a time of significant longevity gains, and at the same time employer pensions are disappearing.

For young people, this should be a motivator to save in your 401(k) accounts and do what you can to prepare for the future.

Pictured: Martha Shedden