Millions of Americans who rely on Social Security benefits may receive increased monthly payments again in 2026. Based on new estimates, the Social Security cost-of-living adjustment (COLA) for 2026 could increase to 2.5%, a slight rise from earlier projections. This means that the 2026 COLA adjustment will be equal to that of 2025.
The cost-of-living adjustment (COLA) enables Social Security benefits to keep pace with inflation. The COLA for 2026 has not been confirmed yet until October, but the current economic trends and inflation data indicate that retirees may receive moderate increments in their benefits in 2026.
Why the 2026 COLA Estimate is Rising
According to the Seniors Citizens League and Mary Johnson, an independent Social Security and Medicare policy analyst, estimates a 2.5% COLA for 2026, which is an increase from the previous estimate of 2.4%. Mary Johnson said that, although this is the same as that of 2025, the figure could increase. “This estimate may rise with four more months of data still to come in before the 2026 COLA will be announced in October,” she said.
How Trump’s Policies Could Influence COLA
Analysts believe that President Donald Trump’s tariffs could have an inflationary effect on Social Security COLA in 2026. Although inflation in May has been moderate, many economists warn that tariffs could push prices higher throughout the summer.
“Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
Senior economist at KPMG, Ken Kim expects inflation to peak above 4% by fall. If that happens, the COLA for 2026 could increase accordingly since the adjustment is based on inflation data in the third quarter, which is from July to September.
What a 2.5% COLA Increase Means for Retirees
A 2.5% COLA increase in 2026 could lead to a monthly boost of benefits by around $40.70. Therefore, the average benefit of $1,948.17 could rise to $1,989. Although the increase is small, it could help recipients manage the rising costs of commodities like food, housing, and healthcare.
Are COLA Estimates Accurate?
Experts are questioning the accuracy and reliability of data used to make COLA projections. The Bureau of Labor Statistics (BLS), which tracks inflation, has scaled back its data collection citing resource limitations. The BLS stopped collecting consumer price data entirely in cities like NY, Lincoln, NE, Provo, UT, and Buffalo and this raised concerns among advocacy groups and analysts.
“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,” said Shannon Benton, executive director of the Senior Citizens League. “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 throughout their retirement.”
Additionally, there are concerns that CPI-W which is used in determining COLA under-represents the actual expenses that retirees face. For instance, while the official inflation could be 2.4%, 80% of seniors surveyed by the Seniors Citizens League said that they projected real inflation in 2024 to be over 3%.
Conclusion
The COLA for 2025 is currently at 2.5% and it is projected that in 2026, that rate could go higher if inflation rises over the summer. There are still four months of data to come and factors such as Trump’s tariffs and continued inflation in insurance costs and housing could have an effect on the projected rate.
Recipients of Social Security should stay alert for updates as they wait for the official COLA for 2026 to be announced in October.