COLA 2026 Forecast Inches Up as Retirees Hope for Higher Checks
The Social Security cost-of-living adjustment (COLA) is the most critical annual update for over 70 million Americans who rely on monthly benefits. And while early projections for the 2026 COLA point to a modest increase, there’s growing concern that it may not be enough to keep up with the real cost of living.
Based on the latest data from The Senior Citizens League (TSCL), the 2026 Social Security COLA is now estimated at 2.3%, up from a previous 2.1% forecast. This adjustment would add an estimated $45.51 per month to the average retired worker’s benefit, raising it just above the $2,000/month threshold.
How Is the COLA Calculated?
The COLA is based on inflation data, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter (July through September). If prices rise compared to the same period the previous year, beneficiaries get a raise to preserve their purchasing power.
| COLA Calculation Period | Data Source | Adjustment Trigger |
|---|---|---|
| July–September 2025 | CPI-W | Year-over-year inflation |
In 2025, beneficiaries received a 2.5% COLA—equal to about $59 more per month for the average retiree. The potential 2.3% increase for 2026 would be slightly below that, but still above the long-term COLA average of 2.3% since 2010.
The Catch: Costs for Older Americans Are Rising Faster Than the COLA
While a higher COLA may sound like good news, experts warn it may still fall short of actual inflation felt by older Americans.
- Shelter inflation: Up 4.4% over the last year
- Medical care services: Increased 2.7%
- CPI-W (used for COLA): Weighed toward working-age expenses, not retirees
These categories represent core spending areas for older people, yet they outpace the projected 2.3% COLA. TSCL reports that retirees have lost 20% of their buying power since 2010, even with recent larger COLAs.
“Even with annual increases, Social Security dollars aren’t stretching far enough,” noted TSCL analysts.
Why This Matters for Retirees
Many retirees rely heavily on Social Security, with Gallup surveys showing 80% to 90% of older Americans count it as a primary or secondary income source. And with shelter and healthcare costs continuing to rise, even small shortfalls in COLA adjustments can strain tight budgets.
Without a significantly higher COLA or a drop in senior-relevant inflation, retirees may continue to lose purchasing power year after year.
Key Takeaways: What to Expect for the 2026 COLA
| COLA Year | Increase | Key Drivers |
|---|---|---|
| 2022 | 5.9% | COVID stimulus, inflation surge |
| 2023 | 8.7% | Highest in 41 years |
| 2024 | 3.2% | Inflation easing |
| 2025 | 2.5% | Based on 2024 CPI-W Q3 |
| 2026 (Est.) | 2.3% | Early 2025 CPI data, January inflation |
- Current forecast: 2.3% increase
- Monthly boost: ~$45.51
- Will it be enough? Likely not, if shelter and medical costs stay elevated
What Retirees Should Do Now
While the final COLA won’t be announced until October 2025, seniors can prepare by:
- Reviewing their budget in light of rising housing and healthcare expenses
- Tracking inflation trends, especially for shelter and services
- Staying informed about SSA updates and advocacy group forecasts
Bottom Line
The projected Social Security COLA for 2026 may deliver another small bump in benefits—but if costs for essentials continue to rise faster than the official inflation formula accounts for, retirees could see their buying power decline yet again.
As always, beneficiaries should remain vigilant and informed, especially as debates over Social Security’s future—and its funding—continue in Washington.
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