New Report Predicts 2.5% Social Security COLA in 2026

The Social Security cost-of-living adjustment (COLA) for 2026 may see a modest increase of 2.5%, according to a new projection from The Senior Citizens League (TSCL). While it is not the highest boost in recent years, this adjustment aims to help beneficiaries keep up with inflation and rising prices.

What Is COLA and Why It Matters?

The cost-of-living adjustment (COLA) is an annual increase applied to Social Security benefits. It is designed to help retired Americans, disabled individuals, and other recipients maintain their purchasing power as the cost of everyday goods and services goes up.

The Social Security Administration (SSA) bases the COLA on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In October each year, the SSA announces the official COLA for the upcoming year, based on inflation data from the third quarter.

According to the current analysis by TSCL, if current trends in inflation continue, beneficiaries may expect a 2.5% increase in 2026. For example, someone receiving $1,800 per month would see an approximate $45 monthly increase.

Read more about how COLA is calculated here

Why the 2026 COLA Might Be Lower Than Recent Years

In 2022 and 2023, Social Security recipients saw record increases of 5.9% and 8.7%, respectively — some of the largest in four decades. These large hikes were in response to soaring inflation caused by the COVID-19 pandemic, supply chain disruptions, and global economic uncertainty.

But as inflation levels off in 2025 and beyond, future COLA increases are expected to be smaller.

TSCL policy analyst Mary Johnson stated, “We are starting to see inflation come down slightly compared to recent years. That’s good for the economy, but it means smaller increases for retirees living on fixed incomes.”

Stay updated with TSCL’s COLA estimates here

What a 2.5% COLA Means for Retirees

A 2.5% increase in 2026 will still be better than nothing, but many retirees are worried it won’t be enough to cover the rising costs of healthcare, housing, and food.

For example:

• Medicare Part B premiums are expected to increase.
• Prescription drug prices are steadily climbing.
• Housing and utility bills in urban areas remain high.

Experts say that even a small increase in benefits is essential, especially for low-income seniors who rely heavily on Social Security as their main source of income.

“Even small COLAs can provide meaningful relief,” said Johnson. “But the concern is that inflation is still outpacing benefit growth for many.”

Will the 2026 COLA Be Final?

No — the 2.5% estimate is not final. It is based on early inflation data from 2025 and subject to change. The official 2026 COLA will be announced by the Social Security Administration in October 2025.

If inflation increases more than expected during the summer and early fall of 2025, the COLA could rise above 2.5%. On the other hand, if inflation cools further, the adjustment may be even smaller.

Check the SSA’s official COLA announcements here

The Bigger Picture: Can COLA Keep Up With Real Costs?

One major criticism of the current system is that COLA does not accurately reflect the real spending habits of older Americans.

The CPI-W, which is used to calculate COLA, focuses on urban wage earners, not retirees. As a result, it underestimates expenses like healthcare, which tend to rise faster and make up a bigger part of a retiree’s budget.

Groups like The Senior Citizens League have long argued for using the Consumer Price Index for the Elderly (CPI-E), which better tracks inflation related to senior citizens.

Despite this, no major policy change has been made, and COLA remains tied to CPI-W, which some believe leaves seniors behind as prices surge in essential areas.

How Should Retirees Prepare?

Since the COLA is only an estimate for now, experts recommend that Social Security recipients begin budgeting carefully and planning for various inflation scenarios.

Here are a few key suggestions:

• Track essential expenses like food, medicine, and utilities to know how your budget is impacted.
• Consider working part-time or finding passive income sources, if possible.
• Stay informed about Medicare changes and healthcare policy, which can affect out-of-pocket expenses.

You can find resources and retirement planning guides from AARP, SSA, and The Senior Citizens League to help you stay prepared.

Explore AARP’s financial tools for retirees

What’s Next?

The final word on the 2026 Social Security COLA will come in October 2025, but for now, a 2.5% increase is the most reasonable early estimate. Retirees and future beneficiaries should keep an eye on inflation trends and official SSA updates over the next year.

While the increase may not seem large, it’s still a sign that Social Security is adapting to changing economic conditions, even if slowly. Policymakers, advocates, and citizens continue pushing for more accurate, fair systems that ensure seniors can live with dignity.

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