Outlook for the 2026 Social Security Cost‑of‑Living Adjustment (COLA)

Background – what COLA is and how it is determined

The U.S. Social Security Administration (SSA) increases benefits each year through a cost‑of‑living adjustment (COLA) so that monthly payments keep pace with inflation. The adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI‑W). The SSA calculates the average year‑over‑year change in the CPI‑W for July, August and September (the third quarter) and announces the COLA in mid‑October. Benefit checks reflecting the new COLA start in January of the following year. For example, the 2025 COLA was 2.5 percent, which raised the average retired‑worker benefit by roughly $49 per month. Critics argue that the CPI‑W does not accurately reflect seniors’ spending because it gives less weight to healthcare and other expenses older Americans face.

Recent inflation trends and the 2025 COLA

Inflation cooled in 2024 after surging in 2022. The CPI‑U (a broader inflation index) rose 2.9 percent from December 2023 to December 2024, and the CPI‑W for the third quarter of 2024 produced the 2.5 percent COLA applied to 2025 benefits. Despite this adjustment, a survey by the Senior Citizens League (TSCL) found that 94 percent of seniors thought the 2025 COLA was too low and 80 percent felt inflation was at least 3 percent. This perceived shortfall underscores why retirees closely watch projections for 2026.

Forecasts for the 2026 Social Security COLA

Predictions from experts and the Board of Trustees

With two of the three CPI‑W readings available (July and August 2025) and September data due on 15 October 2025, experts have released projections:

• Senior Citizens League (TSCL) – The non‑partisan advocacy group projects a 2.7 percent COLA for 2026. TSCL’s monthly updates show its estimate gradually rose from 2.3 percent in March to 2.7 percent in August, reflecting hotter‑than‑expected inflation. TSCL notes that the COLA could land between 2.7 percent and 2.8 percent, depending on September’s CPI‑W data.

  
  

• Social Security Board of Trustees – In its 2025 annual report, the Board modeled three scenarios. The middle‑case estimate anticipates a 2.7 percent COLA, while the low scenario suggests a 2.4 percent increase and the high scenario a 3.0 percent raise. Thus, most projections cluster around 2.7 percent, with a narrow 2.4–3.0 percent range depending on inflation in September.

  
  

• Kiplinger & economists – Economist David Payne at Kiplinger also expects 2.7 percent, noting that August’s CPI‑W reading of 2.8 percent still leaves the COLA at about 2.7 percent. Kiplinger notes that an increase of 2.7 percent would be only 0.2 percentage points higher than the 2025 COLA.

  
  

• Committee for a Responsible Federal Budget and Mary Johnson – These analysts see a slightly higher 2.8 percent COLA. The Cleveland Federal Reserve’s real‑time “nowcast” of inflation suggests a 2.7 percent outcome is more probable, but the final number could still edge higher if September inflation surprises to the upside.

Potential for delay

The third‑quarter CPI‑W data must come from the Bureau of Labor Statistics (BLS). A government shutdown starting 1 October 2025 temporarily halted some BLS operations, raising concern about a delay. However, Social Security benefits are funded separately from annual appropriations. Experts say the COLA announcement will still occur on or shortly after 15 October 2025, and payments will be adjusted beginning January 2026 even if the announcement comes a bit late.

What a 2.7 percent COLA means for benefits

The SSA’s Monthly Statistical Snapshot reports that the average retired‑worker benefit was $2,008.31 per month in August 2025. Applying a 2.7 percent COLA would increase this average to about $2,062.53, a $54.22 monthly ($650.69 annual) increase. The table below illustrates how different benefit levels would change with a 2.7 percent COLA:

Note: These examples show the gross COLA. Retirees who pay Medicare Part B premiums out of their benefit will see a smaller net increase, because the standard Part B premium is forecast to rise from $185 in 2025 to about $206.50 in 2026 — a $21.50 hike. For the average retired worker, the net benefit increase after the Medicare premium would be roughly $32.72 per month.

Issues with COLA adequacy and timing

Forecasts of 2.7 percent or 2.8 percent are modest relative to the higher adjustments of recent years (e.g., 5.9 percent in 2022). Even so, many seniors feel their benefits are not keeping pace. The TSCL survey cited earlier shows widespread dissatisfaction with the 2025 COLA. Several factors contribute to this:

1. Mismatch between CPI‑W and seniors’ expenses: The CPI‑W weights transportation and housing more heavily than healthcare. Seniors often spend a larger share on medical care and prescription drugs, so a COLA based on the CPI‑W understates their cost increases.

   
   

2. Timing lag: Because the COLA uses inflation data from July–September, benefit increases arrive months after retirees have already paid higher prices. In January 2026, seniors will get a raise that reflects price increases from the previous summer.

   
   

3. Rising Medicare costs: Medicare Part B premiums are expected to rise by nearly 12 percent, from $185 to about $206.50. This increase will erode much of the COLA for retirees whose premiums are deducted from their Social Security check.

   
   

4. Tariffs and inflation uncertainty: Economists warn that new tariffs scheduled for late 2025 could push consumer prices higher in the fourth quarter. If inflation spikes after September, the COLA announced in October may prove insufficient.

How retirees can prepare

Experts emphasize that retirees should not rely solely on Social Security to cover living costs. Strategies include:

• Diversify retirement income: Contribute to 401(k), IRA and other tax‑advantaged accounts during working years. For those already retired, consider part‑time work or systematic withdrawals from retirement accounts to supplement benefits.

  
  

• Monitor Medicare costs: Understand how premium increases and income‑related surcharges (IRMAA) affect net Social Security benefits. The hold‑harmless provision protects most low‑income beneficiaries from a net decline in benefits when Medicare premiums rise, but high‑income beneficiaries may not be protected.

  
  

• Stay informed: Check the SSA’s official channels or log into your my Social Security account to see your adjusted benefit after the COLA announcement.

Outlook beyond 2026

Longer‑term, Social Security faces financial challenges. The trust fund is projected to be depleted in 2034, at which point incoming payroll taxes would cover roughly 80 percent of scheduled benefits. Policymakers have proposed modifying the COLA formula — for example, using a CPI‑E (Consumer Price Index for the Elderly), which would increase COLAs by about 0.2 percentage points, or adopting a chained CPI that would reduce future COLAs by about 0.3 percentage points. Some proposals also suggest adding a longevity‑based bonus of 1 percentage point to the COLA for older beneficiaries. These ideas illustrate how the COLA could evolve as lawmakers address Social Security’s solvency.

Conclusion

As of early October 2025, the emerging consensus among analysts and the Social Security Board of Trustees is that the 2026 COLA will be around 2.7 percent. That would exceed the 2025 increase but remains modest compared with the surging inflation of recent years. Retirees should watch for the official announcement on 15 October 2025, understand how the COLA is calculated, and plan for rising Medicare premiums and ongoing inflation pressures. By diversifying income sources and staying informed, beneficiaries can better navigate the limitations of the Social Security COLA system.