Millions of Americans depend on Social Security benefits, and the Cost‑of‑Living Adjustment (COLA) ensures these payments keep pace with inflation. The latest projections indicate a 2.7% COLA for 2026, up from the 2.5% adjustment in 2025.
This modest increase reflects an ongoing effort to help retirees maintain purchasing power amid rising prices.
Understanding the Calculation
COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI‑W). The Social Security Administration (SSA) compares the average CPI‑W for July through September of the current year against the same period the previous year to determine the adjustment.
The Senior Citizens League (TSCL) and policy analysts like Mary Johnson currently estimate the COLA to be around 2.6–2.7%.
What It Means for Your Benefits
The impact of this 2.7% COLA can be roughly illustrated:
| Aspect | 2025 Benefit | Estimated 2026 COLA | Projected 2026 Benefit |
|---|---|---|---|
| Average retiree (monthly) | ~$2,006.69 | +2.7% (~$54/mo) | ~$2,061 |
| Annual increase | — | — | +$650 annually |
Potential Offset: Rising Medicare Premiums
One significant caveat: Medicare Part B premiums are expected to jump from approximately $185 in 2025 to $206.50 in 2026—a $21.50 or 11.6% increase.
For many low-income beneficiaries (receiving ~$800 or less monthly), this premium hike could offset nearly all of the COLA gain, since premiums are automatically deducted from Social Security benefits.
Fortunately, the “hold harmless” clause ensures that benefits aren’t reduced because of premium increases—but it doesn’t increase them either.
What’s Driving the Forecast
- Inflation Trends: July’s CPI‑W data showed inflation hovering around 2.6–2.7%, prompting upward revisions to COLA forecasts.
- External Pressures: Tariff‑related price spikes may push inflation and final COLA slightly higher.
- Data Uncertainty: Concerns exist regarding CPI‑W accuracy due to sampling limitations at the Bureau of Labor Statistics.
What Seniors Can Do to Prepare
- Check your “My Social Security” account later this year for your personalized COLA notice.
- Factor in rising Medicare costs when budgeting your benefit.
- Consider delaying benefits (e.g., until age 70) to earn up to an 8% annual increase.
- Explore additional income streams, such as Treasury Bills or part-time work.
- Keep an eye out: official SSA COLA announcement arrives in October 2025 based on Q3 CPI‑W data.
The projected 2.7% COLA for 2026 offers a modest but welcome boost for retirees—a step up from 2025’s 2.5%. While baby-step gains may seem small, they matter—especially in the face of rising living costs.
Still, Medicare premium hikes may dampen the net benefit for many, particularly those on tighter budgets. Staying informed, planning ahead, and understanding your benefit dynamics will help maximize what this modest increase has to offer.
The SSA’s official announcement in October 2025 will finally confirm the accurate rate and help crystal-clear planning.
FAQs
What is the projected COLA for Social Security in 2026?
It’s currently estimated at 2.7%, slightly higher than 2025’s 2.5%, based on July–September CPI-W data projections.
How is the COLA calculated?
The SSA calculates COLA by comparing the average CPI-W for July, August, and September of this year versus the same period last year.
Will higher Medicare premiums eat into my COLA?
Yes, Medicare Part B premiums are expected to rise to $206.50 in 2026, which may significantly reduce the net gain for low-income beneficiaries.