Once a year, the amount paid to Social Security beneficiaries receives a small bump known as the Cost Of Living Adjustment, or the COLA. This increase is determined using inflation data and is aimed at helping retain the buying power of the benefit income amidst the effects of inflation. For 2025, the COLA was determined to be 2.5% and as a result, Social Security beneficiaries received a 2.5% increase to their monthly benefit amount as of January.
Predictions for what the COLA for 2026 will be have begun emerging and it is projected to be around 2.5% again which means another increase for Social Security beneficiaries come January 2026.
Social Security benefits might get another bump for 2026
Between 1975 and the present, there have only been three years during which the COLA was determined to be 0.0% and as a result, benefits were not increased. This occurred in 2010, 2011, and 2016. The COLA is calculated using the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year and is compared to the third quarter CPI-W from the previous year.
For 2026, the COLA is projected to be 2.5% as per a recent projection from Mary Johnson, a Social Security and Medicare policy analyst. The Senior Citizens League, a nonpartisan group has also predicted to 2026 COLA to be 2.5% based on data from May.
In a statement made to Newsweek, Alex Beene, a financial literacy instructor for the University of Tennessee at Martin said, “It’s still difficult to say where the COLA adjustment will land. Right now, we’re seeing more modest increases in-line with last year’s, but this trajectory could change if there is a pricing impact from the tariff policy being implemented. So far, though, that impact hasn’t been seen on most items, and you’re seeing that reflected in not a sizable uptick in this adjustment.”
How accurate are these predictions?
The COLA for 2026 will be officially announced later this year, in October which means that there actual COLA figure for 2026 could still increase or even decrease depending on which way inflation swings for the third quarter of the year. Additionally, there is the matter of the tariffs imposed by President Donald Trump. Whilst Trump’s tariffs have yet to show a major impact on inflation rates, there is still a possibility for it to increase inflation and subsequnetly, increae the COLA for 2026.
“It’s almost pointless to try to predict it, as it’s just going to match up with the CPI-W,” Drew Powers, the founder of Illinois-based Powers Financial Group, shared with Newsweek. “Most advisers agree that the bigger issue is the CPI-W may not be the best COLA measure for seniors, and often results in a lower COLA increase than the CPI-E, or Consumer Price Index for the Elderly, would have delivered. That small shortfall, compounded over a number of years, results in a dire situation for our oldest citizens.”
In a recent report, The Senior Citizens League previously asserted that, “if the government fails to act and the CPI’s data quality begins to erode, it increases the likelihood of the government providing a COLA that doesn’t match inflation. While there’s a chance that any miss could be higher than actual inflation, it’s just as likely that a miss would be low. A COLA that comes in under inflation would set seniors back for the rest of their retirement, as Social Security checks compound over time with each additional COLA.”
As such, if there is too big a difference between the COLA and the actual rate of inflation, retirees will likely face added financial burden — despite the fact that COLA increases are permanently built into your benefit amount.
“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,” says TSCL Executive Director Shannon Benton.