If you depend on Social Security, the potential 2026 cost-of-living adjustment (COLA) is one of the most important updates of the year.
Analysts now project a 2.7% COLA, slightly above the 2.5% boost in 2025, offering some financial relief—and some new budgeting challenges
2026 COLA Projections at a Glance
| Source / Organization | Projected COLA for 2026 | Notes |
|---|---|---|
| Senior Citizens League (TSCL) | 2.7% | Matches Mary Johnson’s forecast; final announcement expected in October. |
| Mary Johnson (Policy Analyst) | 2.7% | Based on CPI-W data through mid-2025. |
| Earlier TSCL & NAPA estimates | 2.6% | Up from 2.5%, reflecting rising inflation. |
How COLA Is Calculated
The SSA bases the annual COLA on the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), using data from July, August, and September compared to the same period from the prior year. This calculation determines the COLA for 2026—set to be announced in October 2025.
Why 2.7% Matters (But Might Not Go Far Enough)
- A 2.7% COLA aligns closely with the 20-year average (~2.6%).
- For people receiving around $2,005 monthly, it means roughly a $54 increase per month or about $650 extra per year.
- Yet, if Medicare Part B premiums rise—from $185 to $206.50, a $21.50 increase—those with modest benefits (around $800) could see the entire COLA eaten up.
- Fortunately, the “hold harmless” provision ensures that beneficiaries won’t receive a net reduction in their Social Security check even if premiums rise more than the COLA.
What Could Still Change
The July CPI-W data is only the start. August and September inflation figures could push the final COLA estimate up or down. Analysts warn that tariffs and volatile prices in key categories like food or household goods may shift the outcome.
The projected 2.7% COLA for 2026 offers a modest but welcome increase in Social Security income—especially after lower projections earlier in the year.
While it’s certainly better than no increase, rising Medicare Part B costs, inflation spikes, and the narrow gap between spending and benefits mean many retirees will still feel pressured.
Monitoring the final COLA decision and planning accordingly—even supplementing income where possible—remains essential for financial peace of mind in retirement.
FAQs
What exactly is COLA?
COLA (Cost-of-Living Adjustment) is the annual increase in Social Security benefits designed to keep pace with inflation.
When does SSA announce the 2026 COLA?
The Social Security Administration reveals the final COLA—based on Q3 CPI-W data—in October 2025.
Could Medicare premium hikes erase COLA gains?
Yes—rising Part B premiums may offset COLA, but the “hold harmless” rule protects Social Security benefits from being reduced.