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.