Analysis of current economic projections and official data from the Social Security Administration shows the 2026 cost-of-living adjustment, or COLA, will be between 2.7% and 2.8%. This is a small bump that keeps inflation down from the large jumps of the recent past.
While the simple change protects the value of Social Security benefits, another financial calculation shows how little this will mean for most beneficiaries.
The main thing that takes away from the rise is the expected increase in Medicare Part B premiums, which are taken out of the monthly benefit payment. The bottom line is that most people should plan their money based on the actual change to what they get, and not the gross numbers.
The COLA increase: how Social Security benefits are impacted
It aims to hold the buying power of benefits for retirees, the disabled, and surviving relatives. It was created in law in 1975 and replaced a process that Congress would do every year and then decide if they would make a change. Starting in 1982, the COLA increases are put in effect with January benefits, which people get in January of the next year.
It is a key part of the program, because many older adults depend on these payments as their main source of income. By law, the Social Security Administration calculates the COLA based on the changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.
Is this increase enough for American seniors?
This index is put out by the Bureau of Labor Statistics. It tracks the average change in the price of what a basket of goods and services would be. This includes things like housing, food, car travel, and medical care.
The administration determines the COLA by comparing the average of the CPI-W for the third quarter of the current year to the average of the index for the same period in the previous year that had a COLA increase. The percentage change will be used to set the benefits for the next year.
When is the Social Security COLA announced?
The exact and final COLA figure is officially announced each October. This timing is crucial, as it follows the release of the Bureau of Labor Statistics’ inflation data from September. Because the calculation relies on specific economic data from the third quarter, any projections made earlier in the year are just educated guesses.
These estimates are constantly refined and replaced as new inflation data becomes available throughout the year. Essentially, an estimate made in January is far less reliable than one made in August. The entire process is designed to be reactive, ensuring the final COLA reflects actual, measured economic conditions. This means beneficiaries must wait until the fall to know the definitive number.
What’s the expected COLA?
Looking ahead to the 2026 COLA, several organizations have released their initial projections. The consensus is that the increase will be more modest than the significant jumps seen in recent years, settling closer to 3%.
One prominent forecast comes from The Senior Citizens League, a nonpartisan advocacy group, which has proposed a 2.7% increase. Other economic experts have projected a slightly higher 2.8% COLA. This would align with a return to more typical adjustments, similar to the 2.5% increase implemented for 2025.
These early estimates are based on observed inflationary trends from the first half of the year. To understand what this might mean for individuals, we can translate these percentages into rough dollar figures. Using the estimated average monthly benefit for retired workers in 2025 of $1,976, we can calculate potential increases.
A 2.7% COLA would result in a gross monthly increase of approximately $53.35. A slightly higher 2.8% increase would add about $55.33 to the average monthly check.
