2026 Social Security COLA Update: Projected Cost-of-Living Increase Revealed

By now, all seniors receiving Social Security should have received their first 2025 benefits reflecting the 2.5% cost-of-living adjustment (COLA). This adjustment has raised the average monthly Social Security check to $1,976, representing an increase of $49 compared to December 2024.

Although this increase is better than a freeze in benefits, it is unlikely to provide significant relief to retirees facing escalating living expenses. Since 2010, Social Security benefits have lost 20% of their purchasing power, according to the Senior Citizens League (TSCL), and that decline is expected to persist in 2025 and beyond.

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With an eye on the future, many are already wondering what the 2026 COLA will look like. While the official figures won’t be available for several months, early predictions suggest it may be among the smallest increases in years.

Lower Inflation Could Lead to a Modest COLA for 2026

The Social Security Administration (SSA) calculates the COLA based on third-quarter inflation data from July, August, and September of the current and previous years. While the 2024 data is complete, the 2025 numbers are still far from finalized.

The SSA relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine the COLA. However, this method is often criticized because it does not accurately reflect retirees’ spending habits. A more suitable measure, the Consumer Price Index for the Elderly (CPI-E), typically shows higher inflation rates than the CPI-W.

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In early 2024, inflation was rising at a faster pace, but recent months have shown a cooling trend in both CPI-W and CPI-E. While this is good news for consumers, it also indicates that the 2026 COLA may be significantly lower than in previous years.

Projected COLA for 2026: The Smallest Increase Since 2021?

The official 2026 COLA will not be announced until October 15, 2025, when the September inflation report is released. However, early estimates suggest that the adjustment could be one of the lowest in recent years.

According to TSCL, the 2026 COLA is expected to be around 2.1%. If this holds true, the average Social Security benefit would increase from $1,976 to $2,017 per month, adding only $41 per month or $492 annually.

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The actual COLA may still fluctuate depending on inflation trends over the coming months. However, TSCL’s projections have historically been quite accurate. For instance, their April 2024 estimate for 2025’s COLA was off by just 0.1%. Unless inflation unexpectedly spikes, retirees should prepare for a modest benefit increase in 2026.

Estimated Social Security Benefits with 2026 COLA

Other Potential Changes to Social Security in 2025

While COLA adjustments are crucial, they aren’t the only Social Security changes that could impact seniors in 2025 and beyond. Here are some key policy developments to watch:

1. Social Security Fairness Act

Before leaving office, President Biden signed the Social Security Fairness Act, benefiting 2.8 million government employees and their family members by increasing their Social Security benefits.

2. Social Security Benefit Taxes Could Be Eliminated

Former President Donald Trump has expressed interest in eliminating federal taxes on Social Security benefits, which could save households an average of $550 annually, according to the Tax Policy Center. However, implementing this change would require congressional approval, making its future uncertain.

How to Maximize Your Social Security Benefits

Millions of retirees overlook a major Social Security strategy that could increase their annual benefits by up to $22,924. Understanding the best claiming strategies and timing benefits correctly can make a substantial difference in retirement income.

Those who delay claiming Social Security until full retirement age or later can significantly boost their benefits. Exploring spousal and survivor benefits, as well as working while receiving Social Security, can also provide additional financial security.

The 2026 Social Security COLA is shaping up to be one of the smallest increases in years, with early estimates predicting a 2.1% adjustment. While this means a slight boost in benefits, it may not be enough to keep up with rising costs.

With potential changes in Social Security taxation and new benefits for government workers, retirees should stay informed about policy updates that could impact their financial planning. Monitoring inflation trends and exploring strategies to maximize Social Security benefits will be essential for financial stability in retirement.

As more details emerge about the 2026 COLA and potential legislative changes, seniors should reassess their budgets and retirement plans to ensure they remain on track.

FAQs

When will the official 2026 COLA be announced?

The Social Security Administration (SSA) will announce the 2026 COLA on October 15, 2025, following the release of third-quarter inflation data.

How is COLA calculated for Social Security benefits?

The COLA is determined by the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year to the third quarter of the current year.

Will Social Security benefits increase in 2026?

Yes, but the increase is expected to be lower than previous years. TSCL predicts a 2.1% COLA, which would raise the average monthly benefit by $41.