Social Security recipients may be in for a disappointment in 2026. The Senior Citizens League predicts that next year’s cost-of-living adjustment (COLA) could be just 2.5%. That’s the same increase beneficiaries received in 2025.
COLAs are based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks changes in the cost of common goods and services. When inflation rises, Social Security benefits go up.
When there’s no increase or a decrease in inflation, benefits remain unchanged. However, there’s a potential issue with calculating the 2026 COLA. The Bureau of Labor Statistics has had a hiring freeze that limited the amount of price data it can collect.
If the CPI-W doesn’t have complete data, it could result in an even smaller COLA than seniors should get. The Social Security Administration won’t announce the official 2026 COLA until October. But seniors who rely on those annual raises may have to prepare for a disappointing number.
Those who can’t afford a small increase should consider reducing spending or getting a part-time job now.
CPI-W data collection concerns
Since COLAs began in 1975, the average annual increase has been 3.4%.
But the amounts have varied widely, from a high of 14.3% in 1980 to no increases in 2010, 2011, and 2016. The past few years have seen relatively low COLAs:
2024: 2.5%
2023: 1.3%
2022: 5.9%
2021: 1.3%
2020: 1.6%
Some argue that the CPI-W doesn’t accurately reflect the expenses of retirees, especially healthcare costs. One proposed alternative is the Consumer Price Index for the Elderly (CPI-E), which gives more weight to those costs.
A study found using the CPI-E would have resulted in higher COLAs in most years since 1986. But there’s no indication of an imminent change to the COLA calculation. July is an important month for Social Security, as it’s the start of the third quarter data that determines the next year’s COLA.
So far, the Senior Citizens League projects a 2.5% COLA for 2026, but that could change based on inflation trends over the coming months. The official announcement will come in October. Seniors already struggling to keep up with expenses may want to make some changes now, regardless of next year’s COLA.
A higher COLA is the result of higher inflation, so either scenario can be challenging. Options include downsizing your home or working part-time to supplement Social Security income. Staying informed about inflation and COLA estimates is important for retirement planning.
While the system may not be perfect, understanding how it works can help you prepare for the years ahead.
