Social Security’s 2026 COLA

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Many retirees were disappointed by Social Security’s 2025 cost-of-living adjustment (COLA), which increased benefits by just 2.5%—adding only $49 to the average monthly check. With inflation rising faster than benefits, seniors are already looking ahead to 2026, hoping for a more substantial adjustment.

2026 COLA Forecasts

While it’s still too early to determine the official 2026 COLA, projections are already hinting at a higher increase than initially expected.

The Social Security Administration (SSA) calculates COLAs based on inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), comparing average figures from July, August, and September of the current and previous years.

  • The 2025 COLA was set at 2.5%, based on third-quarter inflation data from 2023 and 2024.
  • Early estimates for 2026 COLA initially stood at 2.1% but have since been revised to 2.3%.
  • If this holds, the average monthly benefit could rise from $1,979 to $2,025 in January 2026.

The Senior Citizens League (TSCL), a nonpartisan senior group, regularly updates its projections based on CPI-W trends, Federal Reserve policies, and national economic conditions. Notably, TSCL’s 2025 COLA prediction was accurate within 0.1% by April 2024.

Higher COLA Doesn’t Always Mean More Buying Power

At first glance, a higher COLA seems like good news, but the reality is more complex. Since COLAs are tied to inflation, an increase usually means that prices for food, housing, healthcare, and transportation are also rising.

Despite COLAs, Social Security benefits have lost 20% of their purchasing power since 2010, according to TSCL. Many experts blame this on the use of the CPI-W, which does not accurately reflect retiree spending habits.

CPI-W vs. CPI-E: A Better Measure for Seniors?

Some policymakers argue that the Consumer Price Index for the Elderly (CPI-E) would provide a more accurate measure of senior living costs. Unlike CPI-W, CPI-E accounts for higher healthcare spending among retirees.

Switching to CPI-E would have resulted in a higher COLA for seniors in seven of the last ten years. However, Congress has yet to make this change, though it may become part of larger Social Security reform discussions addressing the program’s $23 trillion funding shortfall.

What’s Next for Social Security in 2026?

The official 2026 COLA will be announced in October 2025, once final inflation data is available. Until then, retirees should monitor economic trends and begin planning their budgets accordingly.

Maximizing Your Social Security Benefits

If you’re approaching retirement, knowing when to claim Social Security can significantly impact your lifetime benefits. Here are some key factors to consider:

  • Full Retirement Age (FRA) Adjustments:
    • If you were born in 1959, your FRA is 66 years and 10 months.
    • If you were born in 1960 or later, your FRA is 67 years.
  • Claiming early at age 62 reduces your monthly benefits by up to 30%.
  • Delaying benefits until age 70 increases your checks by 8% per year, potentially resulting in a 32% higher monthly payment.

For those nearing retirement, adjusting your budget and savings strategy now can help offset the impact of future COLA fluctuations and rising living costs.

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