Each year, the Social Security Administration (SSA) issues an October announcement that determines exactly how much recipients will receive in the new year. This cost-of-living adjustment, commonly known as the COLA, is a percentage increase added to benefit amounts to account for year-over-year inflation and to help preserve purchasing power for retirees, disabled workers, and survivors.
The timing is not arbitrary. Inflation data from the third quarter are used to set the adjustment, which is why the announcement arrives every October once the Bureau of Labor Statistics (BLS) releases final Q3 figures. Throughout the year, Social Security experts and senior-advocacy groups share provisional estimates based on the latest data so that beneficiaries who rely on monthly checks can have a realistic sense of what to expect when January payments arrive.
As we enter the final stretch of Q3, projections for 2026 from The Senior Citizens League (TSCL) currently point to an increase of 2.7%. That would be 0.2 percentage points higher than 2025’s 2.5% raise. However, a bigger headline number does not automatically translate into a comfortable year for retirees. For many households, an inflation-linked increase can be partially or even fully absorbed by other rising costs, which is why a higher COLA is not always the unqualified good news it appears to be at first glance.
How the annual increase is calculated
Each month, the BLS publishes Consumer Price Index (CPI) data. For Social Security, the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) is the benchmark. The calculation compares the current year’s Q3 CPI-W with Q3 from the prior year; if the index is higher, the percentage change sets the next year’s adjustment. This method is designed to be mechanical and transparent, tying benefit changes directly to measured inflation rather than to discretionary policy choices.
According to BLS, “the overall CPI rose 2.7% in July” on a year-over-year basis—precisely in line with TSCL’s preliminary 2.7% projection. Even so, Keith Speights, a finance writer for The Motley Fool, argues this outcome “is shaping up to be a lose-lose scenario for retirees.” His point is straightforward: while the formula boosts payments, the increase can lag behind the specific expenses seniors actually face, eroding real-world buying power.
A recent TSCL study underscores the vulnerability: roughly 21.8 million older Americans report relying solely on their Social Security benefits to make ends meet. At the same time, Medicare Part B premiums are projected to climb by about 11.6% next year. Because Part B is generally deducted directly from Social Security checks, a noticeable slice of any increase may be siphoned off before beneficiaries ever see it in their bank accounts.
Why many seniors remain frustrated
One recurring criticism targets the CPI-W itself. That index reflects spending patterns of a younger working population, not retirees. TSCL’s survey found that 80% of respondents believed inflation was at least 3%, and nearly all agreed reforms are necessary because their benefits appear to be growing more slowly than the costs they actually face—particularly housing-related expenses, medical services, and insurance.
Notably, 68% of seniors said they favor calculating the annual increase with an inflation index tailored to older Americans. At present, the government uses the CPI-W; TSCL advocates switching to the Consumer Price Index for the Elderly (CPI-E), which assigns greater weight to categories like health care that can loom larger in retirement budgets.
TSCL Executive Director Shannon Benton summed up the sentiment in the group’s report: “The data in this study show what seniors have been telling TSCL for years: Social Security checks aren’t keeping up with inflation. If four in five seniors think inflation was higher than the government reported, maybe we should stop questioning their experiences and start questioning why the adjustment isn’t capturing it.”