Recipients of Social Security benefits can expect a slight increase in their benefit payments, as a result of the Cost-of-Living Adjustment (COLA) estimated to increase by approximately 2.5%. This may result in millions of retirees being concerned about the accuracy of future adjustments for 2026.
COLA Forecast for 2026 Ticks Up Again
According to a prominent retiree advocacy group, The Senior Citizens League (TSCL), the forecast for the 2026 COLA has been updated to 2.5%. This is a minor increase from the previous month’s 2.4% estimate. This marks the fourth consecutive monthly increase in TSCL’s projections, suggesting inflation trends are still a factor to watch.
COLAs are meant to help Social Security benefits keep up with inflation by adjusting benefits every year. However, TSCL warns that the process behind calculating these adjustments is under strain, which could result in future inaccuracies that unfairly affect seniors living on fixed incomes.
Data Collection Issues at the Bureau of Labor Statistics
TSCL has raised serious concerns about the issues at the Bureau of Labor Statistics (BLS), the agency in charge of collecting the data that determines annual COLA increases. With questions around staffing cuts and resources, there’s growing worry about how reliable that data really is.
This information is collected through the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W identifies the cost of a standardized basket of goods and services. When the number of surveyed businesses shrinks, the accuracy of the CPI-W becomes more uncertain.
Shannon Benton, Executive Director of TSCL, expressed deep concern over the reduced capacity at the BLS. “While streamlining the federal government is a good thing, that shouldn’t involve cutting back on our ability to measure how our economy is changing. Inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that’s lower than actual inflation, which can cost seniors thousands of dollars over the course of their retirement”, Benton said.
Why Accurate CPI Data Matters
The annual COLA is based on how the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) changes from July through September, compared to the same months the year before. If prices increase, benefits also increase. However, if there isn’t accurate data, the adjustments could be incorrect and it would not reflect the real-life economic costs.
Recent History of Social Security Adjustments
In recent years, the COLA has seen some dramatic swings due to the economic uncertainties caused by the COVID-19 pandemic and its aftermath. In 2022, recipients saw a 5.9% increase which was the largest in decades and this was then followed by a record-setting 8.7% boost in 2023. The 2024 COLA dropped to 3.2%, and the projected 2.5% for 2025 marks a return to more typical adjustment levels seen before the pandemic.
In the two decades, COLA increases have varied widely, from no increase at all in 2010, 2011, and 2016, to a steep 8.7% jump in 2023. This swing shows just how crucial accurate inflation tracking really is. Even a small error, like 0.1%, can cost retirees hundreds of dollars a year.
Looking Ahead: Social Security and COLA
Even though a 2.5% increase in 2025 may assist retirees with the rising expenses, there is still concern whether future adjustments will remain accurate if the BLS continues to face staffing and resource shortages. Social Security advocates are requesting proper data infrastructure to ensure that inflation calculation reflect real economic situations.
As TSCL continues to monitor the situation, retirees are urged to stay informed and updated about the importance of accurate COLA calculations. It is important to note that, these yearly adjustments affect millions of Americans.