cola

In most years, Social Security retirees receive a cost-of-living adjustment (COLA), and that’s likely to happen in 2026. COLAs are critical because without them, benefits would remain unchanged while the price of goods and services increase over time. Retirees would be left with far less buying power, and many would struggle to make ends meet since Social Security is an important income source for seniors.

COLAs aren’t the same from one year to the next, though. While the 2026 COLA hasn’t been announced, there are good estimates of what it’s going to be. Based on the existing data, it looks like the amount of the benefits increase is going to be different from the raise retirees got in 2025.

Here’s what next year’s COLA is likely to be, compared with the benefits bump you got in 2025.

Image source: The Motley Fool.

How will next year’s Social Security COLA compare?

The 2026 COLA will officially be announced on Friday, Oct. 24, 2025. The Senior Citizens League estimates the cost-of-living adjustment will result in a 2.7% benefits increase.

A 2.7% increase would be a bit larger than the raise retirees got in 2025, when benefits rose 2.5%. However, it will be smaller than COLAs from recent memory, including the 3.2% benefit increase in 2024, the 8.7% raise in 2023, and the 5.9% COLA in 2022.

Unfortunately, while the COLA is on track to be larger in 2026 than in 2025, retirees may not see the full 2.7% increase in their payment because Medicare premiums are going to be rising as well — and by much more than they did in 2025.

In 2025, the standard premium for Medicare Part B rose $10.30, jumping from $174.70 in 2024 to $185.00 in 2025. In 2026, projections from the Medicare Board of Trustees suggest that Part B premiums will go up $21.50, from the current $185.00 all the way up to $206.50. This is one of the biggest year-over-year increases in the history of the program.

Unfortunately, since most people have Medicare premiums taken directly out of their Social Security checks, a good portion of the extra money that seniors get from the COLA will disappear.

For example, if someone had a $2,000 monthly benefit in 2024, this year’s 2.5% COLA would have given them around a $50 monthly raise, and they’d have lost $10.30 of it. Their check would have gone up by around $39.70.

Someone with a $2,000 check in 2025, on the other hand, could see their payments rise by 2.7% in 2026, or $54 per month. A $21.50 Medicare premium increase would leave them with only $32.50 extra each month.

This means the “bigger” benefits bump this year may be nothing but a mirage, and retirees could find themselves struggling to maintain buying power based on current levels of inflation.

Is a larger COLA good news or bad news?

The reality is, even aside from the Medicare issue, it isn’t good news that Social Security retirees are on track for a bigger COLA. That’s because cost-of-living adjustments are directly tied to a formula that measures how much the cost of goods and services is going up. A bigger raise means there are higher levels of inflation, and inflation generally isn’t good for older people on fixed incomes.

Many seniors also have money saved in retirement plans, and since people tend to be conservative with their investments during retirement, their returns may not outpace inflation by much when inflation is high. 

For now, seniors will need to simply wait and see what the official COLA announcement brings on Oct. 24. The news will offer insight into what their finances will look like in the coming year, but retirees should prepare for potential disappointment, even if the COLA amount looks good on paper.

Today was supposed to be a banner day for Social Security’s more than 70 million traditional beneficiaries.

Between the 10th and 15th of every month, the U.S. Bureau of Labor Statistics (BLS) releases the previous month’s inflation data. This information is used by the Social Security Administration (SSA) to calculate the annual cost-of-living adjustment (COLA).

The BLS was slated to release the September inflation report — the final piece of data needed to unveil the 2026 COLA — at 08:30 a.m. ET on Oct. 15. But due to the federal government shutdown, the most-anticipated announcement of the year has been pushed back.

While there are some things we can speculate about with regard to the 2026 COLA, there’s one Social Security change in the upcoming year that’s a concrete certainty.

Image source: Getty Images.

Social Security’s 2026 COLA reveal will occur on Oct. 24

In its simplest form, Social Security’s COLA is the near-annual “raise” passed along to beneficiaries to offset the impact of inflation (rising prices). If benefits weren’t adjusted for the effects of inflation, Social Security recipients would see their income lose buying power most years.

For the last half-century, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has served as Social Security’s inflation measuring stick. With more than 200 different spending categories, each with its own unique percentage weightings, the CPI-W can be reported as a single figure by the BLS each month.

The quirk with Social Security’s COLA calculation is that only the months of July, August, and September (the third quarter) matter. The other nine months of the year can be helpful in spotting trends, but they aren’t used in the COLA calculation.

With CPI-W readings from July and August already known, the only puzzle piece missing is September. Unfortunately, most economic data reports from federal agencies are delayed indefinitely during government shutdowns.

However, some BLS staffers are going back to work and will be releasing the September inflation report on Friday, Oct. 24, at 08:30 a.m. ET, according to information provided to CNBC. The SSA will announce the 2026 COLA on Oct. 24, as well.

If you don’t want to wait for the SSA to release its annual Fact Sheet, you, the reader, will have the ability to easily calculate Social Security’s 2026 cost-of-living adjustment on your own once the September CPI-W is known. I walked through the steps of this straightforward COLA calculation earlier this week, which ensures you won’t have to wait for the SSA to make its announcement.

Based on estimates from nonpartisan senior advocacy group The Senior Citizens League and independent Social Security and Medicare policy analyst Mary Johnson, next year’s COLA is forecast to come in at 2.7% or 2.8%, respectively. This would work out to an extra $54 to $56 per month for the typical retired-worker beneficiary, and $43 to $44 extra each month for the average worker with disabilities and survivor beneficiary.

While little is set in stone — other than the expectation of the BLS reporting the last piece of data needed to calculate the 2026 COLA on Oct. 24 — retirees are very likely getting the short end of the stick with next year’s raise. COLAs have consistently come up short for retirees, and a projected 11.5% increase in the 2026 Medicare Part B premium isn’t going to help.

Image source: Getty Images.

No speculating here! This is the one guaranteed Social Security change for 2026

Though the government shutdown has delayed the release of key pieces of information, such as next year’s COLA, the maximum taxable earnings cap, the maximum monthly payout at full retirement age, and the withholding thresholds tied to the retirement earnings test, there is one Social Security change that’s guaranteed to take place in 2026. However, you’ll have to go to the state level to see it.

Firstly, yes, Social Security benefits may be taxable at the federal and state levels.

Individuals whose provisional income — adjusted gross income (AGI) + tax-free interest + one-half benefits — tops $25,000, or $32,000 for couples filing jointly, can have some of their Social Security income exposed to federal taxation.

Meanwhile, nine states currently tax Social Security income to some degree. Listed in alphabetical order, these states are:

1. Colorado
2. Connecticut
3. Minnesota
4. Montana
5. New Mexico
6. Rhode Island
7. Utah
8. Vermont
9. West Virginia

When the calendar flips to Jan. 1, 2026, West Virginia will officially become one of 42 states that don’t tax Social Security income.

In the 2022 tax year, West Virginia made Social Security income exempt from state-level taxation for individuals and jointly filing couples with respective AGIs of $50,000 or less and $100,000 or less.

In March 2024, West Virginia’s legislature passed, and its governor signed, a new law that phases out the taxation of Social Security benefits over a three-year period for those folks who didn’t qualify for this previous AGI adjustment.

Beginning in the 2024 tax year, West Virginians who received Social Security benefits and generated more than $50,000 in AGI (or $100,000 in AGI, if filing jointly) saw 35% of their Social Security benefits exempted from state-level taxation. In 2025, this exemption increased to 65% of Social Security income. In 2026, 100% of Social Security income will be exempted at the state level.

West Virginia will join Kansas, Missouri, Nebraska, and North Dakota as states that have shelved the taxation of Social Security benefits since this decade began.

While this has been anything but a normal COLA announcement month for Social Security, the one thing we do know is that Social Security recipients in West Virginia will be all smiles when the new year arrives.

There’s one piece of news seniors on Social Security have been itching to get for months now — news of an official cost-of-living adjustment, or COLA, for 2026.

At this point, it’s pretty clear that 2026 is not going to be one of those 0% COLA years. Though there have been 0% COLAs in the past, inflation has risen enough to date that experts can say with confidence that Social Security benefits will, indeed, be going up in the new year. The question is by how much.

Image source: Getty Images.

Current estimates seem to be floating in the 2.7% to 2.8% range. But we won’t know what next year’s COLA is for sure until the Social Security Administration makes its big announcement.

That said, Social Security’s upcoming COLA is probably going to be bad news no matter what it actually amounts to. It’s important to understand why — and take steps to work around that.

Why Social Security’s upcoming COLA probably won’t cut it

There’s a reason not to get too excited about Social Security’s 2026 COLA. That reason boils down to the fact that Social Security COLAs have been failing seniors for decades.

In fact, the Senior Citizens League, an advocacy group, says that seniors on Social Security lost 20% of their buying power between 2010 and 2024 due to insufficient COLAs. So chances are, next year’s COLA won’t keep up with inflation, either.

The problem stems from how Social Security COLAs are calculated. They’re based on annual third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Now, let’s look at that index’s name carefully. Notice the terms “urban,” “wage earners,” and “clerical workers.” Do those describe the typical Social Security recipient?

It’s true that plenty of retirees reside in cities. But that’s certainly not a given. In fact, many retirees are able to move outside of cities to lower their costs once they no longer have to worry about proximity to a job.

Many Social Security recipients, by nature, are also not workers. They’re retired. So it’s pretty silly to base Social Security COLAs on an index that measures the costs a different subset of people face.

Advocates have been pushing to base Social Security COLAs on the Consumer Price Index for the Elderly, or CPI-E. But lawmakers haven’t exactly been jumping to make that change, so it’s not one to expect anytime soon.

Prepare to be disappointed now

No matter what raise Social Security recipients end up eligible for in 2026, chances are, it won’t cut it. Plus, if you’re on Medicare as well, any increase in the cost of Part B will eat away at your COLA.

If you want to improve your financial picture for 2026, you can’t sit back and wait for your COLA to take effect for that to happen. Instead, you should take matters into your own hands.

Here are some specific steps to take:

• Do a thorough review of your retirement budget
• Identify a few expenses you can reduce or even eliminate
• Explore options for going back to work, whether as an hourly employee or a gig worker
• See if it’s possible to downsize your home or rent out a room for income
• Explore moving in with a family member if money is very tight
• Review your Medicare plan choices carefully during open enrollment to lower your healthcare costs

There may be other steps you can take to improve your finances, too, and it’s worth exploring them. What you don’t want to do is assume that your Social Security COLA will be the solution to your financial problems.

Even if Social Security’s 2026 COLA is more generous than expected, chances are good that it won’t do the job of keeping up with inflation that it’s supposed to. The sooner you’re able to accept that, the sooner you can start making positive changes that have a real effect.

Every October, the Social Security Administration (SSA) announces the cost-of-living adjustment (COLA) for the upcoming year.

Up until recently, that announcement was supposed to be around Oct. 15 — right after the Bureau of Labor Statistics (BLS) releases September’s inflation report. But with the federal government closed until further notice, it seemed as if that report wouldn’t be released anytime soon.

New information from the BLS, however, suggests we could be getting the COLA announcement sooner than expected. Here’s when it might be coming, what it might be, and how that might affect your retirement.

Image source: The Motley Fool.

When will the new COLA be released?

The SSA calculates the COLA by averaging Consumer Price Index data from July, August, and September. That average is compared to the figure from the same period the year prior, and if it’s higher, the percentage difference will be next year’s COLA.

Before the government shut down, the BLS was expected to release September’s Consumer Price Index data on Oct. 15. But with that office almost entirely furloughed, it was unlikely the report would be published before the government reopened.

However, on Oct. 10, the BLS published an update noting that September’s inflation report would be released on Oct. 24. Generally, the SSA announces the new COLA almost immediately after the BLS inflation report is published.

What might next year’s adjustment be?

We won’t know the official 2026 COLA until the SSA makes the announcement later this month, but nonpartisan advocacy group The Senior Citizens League has estimated that it will land at 2.7%.

That figure is based on already available inflation data, as well as the projected data from September. If September’s numbers are significantly different from the estimates, the COLA may be higher or lower than predicted.

The average retired worker collects just over $2,000 per month in benefits, according to August 2025 data from the SSA. A 2.7% COLA, then, would amount to a raise of around $56 per month.

While any boost in benefits is helpful to a degree, for many retirees, next year’s COLA may be underwhelming. Inflation has stayed stubbornly high throughout the year, and tariffs have also taken a bite out of many retirees’ budgets.

Medicare Part B premiums are also expected to increase from $185 per month this year to a projected $206.50 per month in 2026, according to this year’s Medicare Trustees Report. Because Medicare premiums are typically deducted from Social Security checks, that $21.50 monthly increase will eat up a significant chunk of the COLA raise for the average retiree.

What does this mean for retirees?

It doesn’t hurt to keep an eye out for the COLA announcement to help budget for 2026, but for the most part, retirees may want to avoid relying too heavily on this adjustment to make ends meet.

Again, any extra cash can help pay the bills, especially with many older adults stretched thin financially right now. But with Social Security not going as far as it used to, it may be wise to start finding ways to reduce your dependence on your benefits.

According to a report from The Senior Citizens League, Social Security benefits lost around 20% of their buying power between 2010 and 2024. If you can swing it, finding a source of passive income or going back to work temporarily could have a bigger impact on your budget than any COLA.

This won’t be possible for everyone, but if you can beef up your savings even slightly, you won’t need to worry quite as much about future COLAs falling short. No matter where the 2026 adjustment lands, it’s wise to keep realistic expectations about how far that money will go.

For most retirees, Social Security is more than just a monthly deposit into their bank accounts. It represents a financial lifeline that helps them make ends meet.

In 2023, Social Security lifted more than 22 million people out of poverty, according to an analysis from the Center on Budget and Policy Priorities (CBPP), and 16.3 million of these recipients were aged 65 and over. If Social Security didn’t exist, the CBPP estimates the poverty rate for adults aged 65 and up would jump nearly fourfold, from 10.1% (with existing payouts) to 37.3%.

Meanwhile, 24 years of annual surveys from Gallup show that 80% to 90% of aged beneficiaries lean on their payouts in some capacity to cover their expenses.

For retirees, few announcements have more bearing than the annual cost-of-living adjustment (COLA) reveal in October. Though Social Security payouts are on track to do something that hasn’t been witnessed in almost 30 years, next year’s “raise” appears set to give retirees the short end of the stick, yet again!

Image source: Getty Images.

What is Social Security’s COLA and why might the 2026 reveal be delayed?

The fabled “COLA” you’ve probably been hearing and reading about over the last couple of weeks is the tool the Social Security Administration (SSA) has on its proverbial toolbelt to keep benefits aligned with inflation.

Hypothetically, if a large basket of goods and services that retirees regularly purchase increases in cost by 2% from one year to the next, Social Security benefits would also need to climb by 2%. Otherwise, these folks would see their buying power decline. Social Security’s COLA attempts to mirror the inflationary pressures that program recipients are facing so they don’t lose purchasing power.

This near-annual raise is based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which has measured price changes for Social Security since 1975. It has more than 200 individually weighted categories, which allows the CPI-W to be chiseled down to a single figure at the end of each month. These readings can be compared to the prior-year period to determine if prices are collectively rising (inflation) or declining (deflation).

What makes the COLA calculation unique is that only CPI-W readings from July, August, and September (the third quarter) are used to determine the upcoming year’s raise. If the average third-quarter CPI-W reading in the current year is higher than the comparable period last year, prices, as a whole, have risen, and so will Social Security checks in the upcoming year.

The catch with Social Security’s 2026 COLA is that its expected reveal on Oct. 15 may be delayed. The September inflation report is the final puzzle piece needed to calculate the program’s cost-of-living adjustment. However, most economic data releases are delayed during a federal government shutdown, which, in turn, can postpone the Oct. 15 COLA announcement set for 8:30 a.m. ET.

A higher prevailing rate of inflation in recent years has led to beefier annual COLAs. U.S. Inflation Rate data by YCharts.

A first-of-its-century raise is eventually headed retirees’ way

Once the SSA does have the necessary data to calculate and reveal the 2026 COLA, it’s a virtual certainty that beneficiaries will witness history being made.

Over the last four years, Social Security recipients — retired workers, workers with disabilities, and survivor beneficiaries — have enjoyed above-average cost-of-living adjustments. From 2022 through 2025, their Social Security checks grew by 5.9%, 8.7%, 3.2%, and 2.5%, respectively. To put these figures into some sort of context, the average COLA increase over the last 16 years was 2.3%.

Based on two independent estimates that were updated following the release of the August inflation report, a fifth-consecutive year above this 16-year average is expected.

Nonpartisan senior advocacy association The Senior Citizens League (TSCL) has pegged their 2026 COLA forecast at 2.7%, while independent Social Security and Medicare policy analyst Mary Johnson is calling for a slightly higher boost of 2.8%. These two forecasts would imply a roughly $54 to $56 per-month increase in the average retired-worker benefit in the new year.

More importantly, a 2.7% or 2.8% COLA would result in an event that hasn’t been witnessed in almost three decades. From 1988 through 1997, Social Security COLAs vacillated between 2.6% and 5.4%. If the 2026 COLA comes in at 2.5% or above, which looks like a virtual certainty based on independent estimates, it would mark the first time in 29 years that benefits will have risen by at least 2.5% for five consecutive years.

Image source: Getty Images.

The purchasing power of a Social Security dollar isn’t what it used to be

Unfortunately, this potentially history-making moment won’t be fully felt or enjoyed by aged beneficiaries. Though nominal payouts have notably climbed in recent years, the painful reality is that the buying power of Social Security income simply isn’t what it once was.

For example, you might be surprised to learn that the CPI-W isn’t doing retirees any favors. While this index is designed to mirror the inflationary pressures that Social Security’s retired workers are contending with, it has built-in flaws that keep this from happening.

The CPI-W is an index that tracks the cost pressures faced by “urban wage earners and clerical workers,” who, in many cases, are workers under the age of 62. By comparison, 87% of Social Security beneficiaries are 62 and above, as of December 2024.

Aged beneficiaries spend their money differently than workers under the age of 62. Specifically, retirees spend a higher percentage of their budget on medical care services and shelter than younger folks. Even though seniors make up 87% of all Social Security recipients, the CPI-W doesn’t account for the added importance of shelter and medical-care service costs in the COLA calculation.

Furthermore, the trailing-12-month inflation rate for shelter and medical care services has pretty consistently been higher than the annual COLAs beneficiaries have received. According to TSCL, this disparity has played a role in reducing the buying power of Social Security income by 20% from 2010 to 2024. A 2.7% or 2.8% cost-of-living adjustment isn’t going to offset or halt this decline in purchasing power.

To make matters worse, dual enrollees — those receiving Social Security income who are also enrolled in traditional Medicare — are expected to see sizable COLA offsets due to a projected double-digit percentage increase in the Part B premium in 2026.

Part B is the portion of Medicare responsible for outpatient services, and the premium for Part B is commonly deducted from a Social Security recipient’s monthly benefit. An estimate from the 2025 Medicare Trustees Report calls for an 11.5% jump in the Part B premium to $206.20 next year. For lifetime low earners, this increase might gobble up every cent of their projected 2026 COLA.

Regardless of whether or not Social Security’s 2026 COLA is delayed, it’ll mark another year where retirees get the short end of the stick.

The government has been shut down since Oct. 1, after Congress was unable to pass a funding bill for the new fiscal year that started this month. With severe disagreements between Republicans and Democrats, many government agencies will remain closed indefinitely. Only essential services are allowed to continue operating, and government workers who aren’t furloughed are expected to continue working without pay until the shutdown is resolved.

Thankfully for the 70 million Americans receiving monthly Social Security benefits, those payments are considered essential. And for many households that’s the absolute truth. An important aspect of the program for households relying on Social Security to make ends meet is the annual cost-of-living adjustment, or COLA. Without it, many of those recipients would find their finances falling behind the rising prices stemming from inflation.

While payments are continuing amid the shutdown, many may be wondering what it means for next year’s COLA.

Image source: Getty Images.

The key data provider for next year’s COLA is shut down

The Social Security Administration is in charge of calculating the annual COLA, but it relies on data provided by another government agency — the Bureau of Labor Statistics. Every month, the BLS publishes a report detailing changes in the Consumer Price Index, or CPI, which is one of the most common metrics used to assess inflation.

The annual COLA is based on a specific version of the CPI, the CPI for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration takes the average increase in the CPI-W during the third quarter (July through September), and that number becomes the COLA for next year.

Unfortunately, the BLS is not considered an essential service. As a result, it’s not releasing new data, including the jobs report that was supposed to come out the first Friday of the month. The most recent update on its website simply states, “This website is currently not being updated due to the suspension of Federal government services.”

While we received an update on July and August’s CPI readings, September’s is currently scheduled for Oct. 15. If the government shutdown isn’t resolved by then, we’ll face a delay in the release of September’s CPI data, and, as a result, the 2026 COLA calculation. (Even if Congress resolves the shutdown earlier, it could take several days to compile the data and publish the report, resulting in a delay.)

The good news is the BLS likely completed its September data collection to get an accurate picture of price inflation during the last month of the quarter. BLS workers collect data throughout the month, dividing it into 10-day periods. With the government shutdown going into effect on Oct. 1, it likely collected all or most of the data needed to accurately calculate the CPI numbers for September.

That means the government shutdown is unlikely to have any impact on the 2026 COLA, even if the release of the information is delayed.

Here’s how big the 2026 COLA could be

Despite the potential delay, the 2026 Social Security COLA is shaping up to be a relatively large boost to benefits. As mentioned, we already have CPI reports for July and August, and those have provided a pretty clear picture on where inflation is heading.

The July CPI-W reading came in 2.5% higher than last year and the August reading climbed 2.8%. With fairly soft inflation over the summer last year, many expect the inflation rate continued accelerating in September. The Cleveland Fed’s NowCast estimates the September CPI-U reading (which is slightly different than the CPI-W used for the COLA) climbed 3%, up from 2.9% in August.

A similar bump in the CPI-W reading would result in a COLA of 2.7%. That’s in line with analyst expectations from The Senior Citizens League. Independent analyst Mary Johnson and the Committee for a Responsible Federal Budget project a 2.8% COLA.

Either way, Social Security beneficiaries are in line for a bigger raise than 2025’s 2.5% COLA. But that also means that prices have climbed faster this year, leaving many retirees trying to stretch their monthly payments further.

With most of the data available to make a fairly good guess as to what the 2026 COLA will be, retirees can start planning now even though the actual COLA release may be delayed due to the government shutdown.

The big day for Social Security’s more than 70 million traditional beneficiaries is right around the corner. Assuming the government shutdown doesn’t delay a key data release, on Oct. 15, the Social Security Administration will unveil a multitude of changes for the upcoming year, with the highlight being the 2026 cost-of-living adjustment (COLA).

For retired-worker beneficiaries, who accounted for more than 76% of all traditional Social Security recipients in August, the income they receive from this all-important program is often vital to their financial well-being. Almost a quarter-century of annual surveys from Gallup shows that 80% to 90% of retirees lean on their monthly Social Security check to cover some aspect of their expenses.

Though retired-worker beneficiaries are less than two weeks away from knowing precisely how much they’ll receive each month in 2026, the dreaded lose-lose scenario looks to be very much on the table.

Image source: The Motley Fool

Social Security’s cost-of-living adjustment plays an important role for beneficiaries

Before digging into the nitty-gritty of what’s to come for program recipients, it’s imperative to understand why Social Security’s COLA exists.

The best way to view Social Security’s cost-of-living adjustment is as a near-annual “raise” that accounts for the effects of inflation that beneficiaries are contending with. Hypothetically, if a large basket of goods and services regularly purchased by Social Security beneficiaries increased in cost by 3% from one year to the next, Social Security payouts would also need to climb by the same percentage to avoid a loss of buying power. Social Security’s COLA is the raise that attempts to mirror the effects of rising prices (inflation).

Prior to 1975, there was no formula for calculating COLAs on an annual basis. From the very first payout in January 1940 through the end of 1974, only 11 cost-of-living adjustments were enacted by special sessions of Congress.

The near-annual COLAs we’re used to today began in 1975, which is when the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was adopted as Social Security’s inflationary measure. The CPI-W is reported as a single figure on a monthly basis, which allows for quick year-over-year comparisons to determine if prices are, collectively, rising (inflation) or declining (deflation).

The quirk with Social Security’s COLA is that only three months of readings factor into the calculation: July, August, and September (i.e., the third quarter). If the average third-quarter CPI-W reading in the current year is higher than the comparable period of the previous year, inflation has taken place and beneficiaries are set for a higher payout. Payouts can stay the same year to year; they are not decreased, even if prices in the measured period drop.

A historic expansion of U.S. money supply sent the prevailing inflation rate and Social Security COLAs soaring. US Inflation Rate data by YCharts.

Independent Social Security COLA estimates for 2026 have been narrowed

Based on independent estimates, retired workers, workers with disabilities, and survivors of deceased workers are all in line for a boost to their monthly benefit in the new year.

Following a decade of anemic cost-of-living adjustments during the 2010s, the last four years have featured above-average COLAs. A historic expansion of U.S. money supply during the earlier days of the COVID-19 pandemic led to the highest prevailing rate of inflation in the U.S. in four decades. The result was a 5.9% COLA in 2022, followed by 8.7% in 2023, 3.2% in 2024, and 2.5% in 2025. To add some context to these payout increases, the average COLA over the previous 16 years is 2.3%.

The encouraging news (at least on paper) for Social Security recipients is that the 2026 COLA is on track to do something that hasn’t been witnessed in 29 years. For the first time since 1988 through 1997, the program’s raise is forecast to reach at least 2.5% for a fifth consecutive year. On a nominal-dollar basis, Social Security beneficiaries have seen their payouts notably increase over the last half-decade.

According to nonpartisan senior advocacy group The Senior Citizens League (TSCL), next year’s COLA is projected to come in at 2.7%. Independent Social Security and Medicare policy analyst Mary Johnson, who retired from TSCL early last year, foresees a slightly more robust payout boost of 2.8% in 2026.

If the assumption is made that one of these two forecasts proves accurate, the average monthly benefit for retired workers would climb by approximately $54 to $56 in 2026. Meanwhile, the average worker with disabilities and average survivor beneficiary would both see their monthly Social Security income rise by $43 to $44, respectively.

Image source: Getty Images.

The dreaded lose-lose scenario is looking likely for most retirees in 2026

But even though independent estimates point to a fifth straight year where Social Security’s raise will top its 16-year average, aged beneficiaries are almost certain to discover the 2026 COLA comes up short in two ways.

The first issue relates to the inherent shortcomings of the CPI-W. While near-annual COLAs are a vast improvement compared to Congress passing along raises without rhyme or reason, the CPI-W is itself far from perfect.

As its full name makes clear, the CPI-W tracks the costs “urban wage earners and clerical workers” are facing. These are typically working-age Americans not currently receiving a Social Security benefit. More importantly, urban wage earners and clerical workers spend their money differently than seniors — and adults aged 62 and over make up 87% of Social Security’s traditional beneficiaries.

Older, retired Americans spend a larger percentage of their monthly budget on shelter and medical care services than working-age folks. Not only does the CPI-W not adequately account for the higher weighting retirees place on these two spending categories, but the trailing-12-month inflation rate for shelter and medical care services has been consistently higher than the COLA passed along to program recipients.

Based on two separate studies by TSCL, the purchasing power of a Social Security dollar dropped by 36% from 2000 to 2023, and by 20% between 2010 and 2024. This loss of buying power is likely to continue in 2026.

Retirees who are dually enrolled in Social Security and traditional Medicare are also set to lose in the upcoming year.

People who are enrolled in traditional Medicare and Social Security almost always have their Medicare Part B premium automatically deducted from their monthly Social Security payout. Part B is the portion of Medicare responsible for outpatient services.

In 2023 and 2024, the Part B premium rose by 5.9% each year. But based on estimates from the June-published Medicare Trustees Report, the Part B premium is forecast to climb 11.5% to $206.20 per month in the upcoming year. There’s little doubt that this is going to partially or fully offset the impact of next year’s Social Security COLA for most dual enrollees.

Even if the cost-of-living adjustment for 2026 surpasses TSCL’s and Johnson’s respective forecasts, it won’t be enough to pull retirees out of this lose-lose scenario in 2026.

Seventeen days. That’s how much longer Social Security beneficiaries must wait to find out how big their “raise” will be in 2026.

The Social Security cost-of-living adjustment (COLA) countdown is about to kick into overdrive. But you don’t have to sit on pins and needles in anticipation of the official COLA announcement on Oct. 15, 2025, to have a pretty good feel for what the increase will be.

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The best COLA prediction right now

If you want to know how big of a Social Security benefit increase to expect, probably the best place to turn is The Senior Citizens League (TSCL). This nonprofit organization has advocated for seniors since 1992, initially as part of The Retired Enlisted Association and then as an independent entity beginning in 1994.

TSCL developed a sophisticated statistical model that projects the next Social Security COLA. This model is updated monthly. It incorporates inflation and unemployment data, as well as the interest rates set by the Federal Reserve.

Earlier this month, TSCL announced its final prediction for the 2026 Social Security COLA. The organization projects an increase of 2.7%, a little higher than the 2.5% COLA given in 2025. It’s also slightly above the average benefit adjustment over the last 20 years of 2.6%.

How much additional money will this COLA give retirees? It depends on your current benefit amount, of course. However, the average increase will be $54 per month if TSCL’s model is right.

What could change by Oct. 15?

The Social Security Administration (SSA) already has most of the data it needs to calculate next year’s COLA. It will receive the last piece on Oct. 15 when the U.S. Bureau of Labor Statistics (BLS) releases its inflation numbers for September.

SSA doesn’t use the most widely followed inflation metric in the BLS report, the Consumer Price Index. Instead, the agency bases the annual Social Security COLA on a different statistic — the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As its name indicates, this index measures how much prices have increased for blue-collar workers in urban areas.

The COLA is calculated by determining the percentage increase (if any) between the CPI-W for the third quarter of the current year and the CPI-W in the third quarter of the previous year. SSA only needs to plug in the CPI-W for September to crunch the numbers.

Could the actual 2026 COLA that will be announced on Oct. 15 differ from the 2.7% predicted by TSCL? Absolutely. Inflation could be higher in September than anticipated, perhaps due to the impact of tariffs making their way through the U.S. economy. On the other hand, the effects of tariffs could be more muted than TSCL’s model projects, resulting in a lower COLA. Either way, TSCL’s projected number will probably be close to the actual 2026 COLA.

One “gotcha”

Retirees shouldn’t count on having an additional 2.7%, give or take a couple of percentage points, reach their bank accounts, though. There’s one “gotcha” that will likely reduce how much extra money you’ll receive.

Most retirees ages 65 and older have their Medicare premiums automatically deducted from their monthly Social Security benefit payments. Unfortunately, your Medicare Part B premiums will almost certainly be much higher than the expected 2.7% Social Security increase.

The Medicare Trustees project that Part B premiums will rise by 11.6%. This translates to an extra expense of $21.50, enough to wipe out much of the average retiree COLA of $54. The annual Medicare Part B deductible will also likely jump by $31 to $288 next year.

The countdown is on for finding out the exact amounts for the 2026 Medicare Part B premiums and deductibles, too. While the numbers will probably be announced in October, retirees might not learn how their pocketbooks will be impacted as soon as they learn what their Social Security COLA will be.

Social Security may be the most valuable retirement asset most Americans have. The pension for retired workers accounted for 20% of families’ total wealth in 2022, according to a study by the Congressional Budget Office. That’s based on a calculation valuing all future payments at present value.

Those future payments get a boost every year, which could make them even more valuable to Americans. The annual cost-of-living adjustment (COLA) helps benefits keep up with inflation. And while we won’t have the official 2026 COLA number until mid-October, it looks like it’ll come in higher than what analysts anticipated at the start of the year.

But a bigger COLA isn’t necessarily reason for Social Security recipients to celebrate. Here’s what retirees need to know.

Image source: Getty Images.

What’s pushing the 2026 COLA higher?

The annual COLA is based on a standard measure of inflation published every month by the Bureau of Labor Statistics called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

The CPI-W is one of several Consumer Price Index measurements the government publishes. The BLS surveys thousands of businesses and households across the country to collect pricing data on over 200 line items. Those prices are then indexed to a standard price from when the BLS first started collecting data, and weighted according to typical spending patterns of the group the index is supposed to follow. In the case of the CPI-W, the basket of goods represents the spending of working-age adults living in cities.

The Social Security Administration calculates the COLA by taking the average year-over-year increase in the CPI-W during the third quarter, i.e. July, August, and September. The BLS just published August’s CPI numbers on Sept. 11, with the CPI-W climbing 2.8% year over year. That follows a 2.5% increase in July. The final reading to determine the 2026 COLA will come out on Oct. 15.

Based on expectations for that reading, both The Senior Citizen’s League and independent analyst Mary Johnson have published their expectations for next year’s COLA. The former expects it to come in at 2.7% while the latter expects retirees to receive a 2.8% bump. Both estimates are higher than the 2.5% initial estimate The Senior Citizen’s League published before the start of the year.

The reasons for a higher COLA are bad news for 70 million beneficiaries

A bigger-than-expected raise is usually great news for those receiving it, but in the case of Social Security’s 70 million beneficiaries, it signals a challenging economic environment.

The biggest challenge is that the CPI-W doesn’t perfectly match the spending of most seniors. Most people don’t spend their money in retirement the same way they did when they were working age. They probably commute less and spend less on new clothing. They probably have different dining habits. And it’s almost certain that their medical bills have climbed higher as they grow older.

To that end, some of the biggest expenses seniors face are climbing faster than the overall CPI-W numbers. Medical care services were notably 4.2% higher this August than the year before. While gasoline prices were down, utilities were way up. Shelter expenses climbed 3.6%. Despite a 2.7% or 2.8% raise coming in January, most seniors have seen their real cost of living climb much more over the past year.

Rising medical costs are most prominently seen in the Medicare Trustees’ estimate for next year’s Medicare Part B premium. They expect the program will have to charge a standard monthly premium of $206.20 next year, an 11.5% increase from 2025. For those keeping track, that far outpaces the expectations for Social Security’s COLA. Beneficiaries age 65 and older enrolled in Medicare will see that amount come right out of their new monthly payments.

The Senior Citizens League contends this situation isn’t unique to this year’s COLA. It ran a study that estimates the buying power of someone’s benefits who started Social Security in 2010 has decreased 20% through 2024.

The best economic environment for Social Security has historically been slow, steady, and predictable inflation. Under the current administration, which has gone back and forth on trade policies numerous times since the start of the year, prices have become anything but predictable. While many businesses have taken preemptive steps to curb and delay the impact of tariffs, the costs will eventually get passed through to consumers. That could result in even more pain for those on a fixed income next year.

While a 2.7% or 2.8% raise might be bigger than anticipated, many seniors may find that it doesn’t go far enough next year.

On Aug. 14, 1935, President Franklin D. Roosevelt signed the Social Security Act into law, intending to provide financial security during the Great Depression. More than four years later, in January 1940, the first monthly Social Security checks were sent out. Since then, the program has grown tremendously to be one of America’s largest and most important.

In the 90 years that Social Security has been in place, it has benefited hundreds of millions of retirees. In fact, the program will make over $1.6 trillion in payments to around 72 million beneficiaries, including those receiving retirement benefits, disability benefits, and survivor benefits.

Image source: Getty Images.

A lot has changed with Social Security over the past 90 years. If you’re a current recipient, you can attest to how much continues to change — including eligibility, benefit calculations, and full retirement ages. But arguably the most important change happens annually with the cost-of-living adjustment (COLA).

The annual COLA was put in place in 1972 to help retirees deal with inflation while receiving fixed monthly benefits. The official COLA percentage will be announced on Oct. 15, but retiree advocacy group The Senior Citizens League (TSCL) has routinely put out projections to help retirees plan ahead.

In its latest estimate released this month, TSCL has the upcoming COLA at 2.7%. Although the projection shouldn’t be taken as a guarantee, it’s worth taking a deeper dive into how the COLA works and what a 2.7% adjustment could mean for retirees.

How the annual COLA is determined

To determine the yearly COLA, the Social Security Administration (SSA) looks at a specific measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It’s published monthly by the Bureau of Labor Statistics (BLS) and takes into account the price of goods and services like food (groceries and restaurants), transportation (vehicles, gas, and public transportation), housing (rent and utilities), and healthcare (services, prescriptions, and insurance premiums).

The SSA uses a three-step process to come up with the specific percentage to set as the COLA:

1. Calculate the CPI-W average for the third quarter (July, August, and September) of the current year.
2. Calculate the same average for the previous year.
3. Set the percentage increase as the COLA for the upcoming year (rounding it up to the nearest 0.1%).

For example, the third-quarter CPI-W average in 2024 was 308.729, and the average in 2023 was 301.236. That 2.43% increase is how we ended up with the 2.5% COLA for 2025.

If the CPI-W decreases or stays the same, there is no COLA, and benefits remain unchanged. It’s not common, but it has happened (in 2010, 2011, and 2016).

US Inflation Rate data by YCharts.

Complaints about the COLA

A benefits increase sounds like a good thing for Social Security, and for the most part, it is. However, a major (and valid) complaint has been that the COLA isn’t typically enough to truly offset the effects of inflation.

According to TSCL, Social Security recipients have lost around 30% of their purchasing power since 2000. This means every $100 in benefits received in 2000 would only buy $70 worth of goods and services today. From 2010 to 2024, TSCL says that Social Security benefits lost 20% of their purchasing power; that’s far from ideal.

If TSCL’s 2.7% COLA estimate turns out to be true, the average monthly benefit would increase from $2,007 (July’s average) to $2,061. A $54 monthly increase is better than no increase, but retirees have likely seen their monthly expenses increase by more than that.

There aren’t any concrete plans in place to change how the SSA calculates the annual COLA. In the meantime, it’s best for retirees to assume that benefits alone may not fully keep up with inflation, and make efforts to adjust their spending accordingly.

For people who reach retirement without much savings, Social Security can be a true lifeline. And it’s people in that situation who tend to be very reliant on the program’s cost-of-living adjustments (COLAs).

Social Security benefits are eligible for a COLA each year. That doesn’t mean they’re guaranteed to get one, though.

Image source: Getty Images.

If there’s no rise in inflation from one year to the next, benefits don’t increase. Thankfully, though, the worst thing that happens is that they stay put. Social Security benefits can’t be adjusted downward, even if there’s a drop in inflation year over year.

At this point, many Social Security recipients are eager to know what raise they’ll be getting in 2026. And unfortunately, it’s too soon to have an official answer.

Social Security COLAs are based on third-quarter inflation data. This means that until data from September comes in, a COLA can’t be calculated. It’s for this reason that the Social Security Administration won’t be able to announce a COLA until Oct. 15.

However, based on inflation data so far, there are clues as to what year’s COLA might be. Whether you’re happy with the number, though, depends on how you look at things.

What we know about 2026’s Social Security COLA so far

In 2025, Social Security recipients saw their benefits increase by 2.5%. And many seniors were unhappy with that small a raise.

So far, next year’s COLA is potentially looking to be more promising. The Senior Citizens League, an advocacy group, is estimating that 2026’s raise will come in at 2.7%.

Of course, this number could wiggle upward or downward, depending on what inflation has in store for August and September. But either way, there’s a good chance seniors on Social Security will get a slightly larger raise in 2026 than they did this year.

Should you be happy with a 2.7% COLA?

That depends. On one hand, it’s higher than this year’s raise, and it’s not nothing. There have been many COLAs in the past that were much smaller (including a number of 0% COLA years).

On the other hand, 2.7% is hardly a large boost. If you’ve been struggling to keep up with your living expenses, you may find that a 2.7% Social Security COLA doesn’t do all that much for you.

But there’s another silver lining to a 2.7% COLA, or something in that vicinity. A moderate COLA is an indication that inflation isn’t rising at such a rapid pace.

There’s fear that in the coming months, tariffs will drive living costs up — not just for seniors, but Americans on a whole. If next year’s COLA ends up somewhere in the ballpark of 2.7%, it will be an indication of economic stability.

Think about your lifestyle carefully if you’re COLA-dependent

All told, you’ll have to wait until mid-October to see what the official word is on next year’s COLA. But if you’re worried it won’t be enough, it may be time to reassess your financial situation.

Think about the things you spend money on and the value they bring you. You may not be able to cut back on food or electricity, but you may be able to sell a nicer car and replace it with a cheaper one. Or you may be able to give up a car altogether if you live in a walkable neighborhood and no longer have a job to commute to on a daily basis.

Another thing worth considering is part-time work if you’re able to do it. Not only might that give you something to do with your time, but it could also improve your finances a lot more than a Social Security COLA — even a larger one.