Anticipation is likely growing for Social Security beneficiaries as we are now one month away from the next Cost of Living Adjustment announcement. The Cost of Living Adjustment, or COLA, is an increase implemented to Social Security benefit amounts aimed at countering the effects of year over year inflation. Since the COLA is determined using inflation data for the third quarter of each year, the Social Security Administration (SSA) usually announces the COLA in October. As such, the 2026 COLA figure will be announced by the agency one month from now on October 15th.
For 2025, the COLA was announced to be 2.5% and as a result, all benefits were adjusted accordingly. According to the latest projections from Social Security experts, the 2026 COLA is likely to surpass the 2025 COLA slightly, with estimates currently sitting at 2.7% – 2.8%. Despite the higher projected COLA for next year, many seniors may still feel the pinch of inflation when paying for their expenses, particularly those who rely solely or primarily on their Social Security check. Here is everything you need to know.
Social Security COLA
Prior to 1975, the agency did not have any sort of set formula that could be used to determine the COLA. If benefits were to be increased, it would have had to be done at the discretion of Congress. As of 1975, however, the SSA began using a subset of the CPI called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine year over year inflation which then allowed for COLA’s if there is an increase.
The third quarter CPI-W of the current year is measured against the third quarter CPI-W of the previous year and if there is an increase, this becomes the next COLA. If there is a decrease from the previous to current year, the COLA simply defaults to 0.0%, meaning that benefits remain unchanged even if inflation declines.
Based on the CPI data available to date, The Senior Citizens League (TSCL) and independent analyst Mary Johnson have placed their estimates for the 2026 COLA at 2.7% and 2.8% respectively. If these figures hold steady, 2026 will be the fifth consecutive year in which the COLA reaches or exceeds 2.5%.
Tariffs and Medicare premiums
If the COLA comes it at the projected 2.7%, seniors will on average be looking at a $54 bump to their benefits in the new year. Seniors enrolled in Medicare Part B, however, will not likely see the full $54 reach their bank accounts. This is because Part B premiums are automatically deducted from the benefit check. In addition to this, Medicare Part B premiums are projected to increase by 11.6% in the new year as per the latest Medicare trustees’ report. This increase will bring the price of the premium up to $206.20.
In a more broader sense, seniors will still not see their benefits retaining buying power through a 2.8% COLA increase, and the reason behind this lies in the formula used to determine the annual COLA. The CPI-W measures the cost of a basket of goods and services that would be purchased by “urban” and “clerical” workers, which is a cohort of individuals who are in the workforce currently and therefore likely to be significantly younger than retirees receiving Social Security.
As a result, the spending habits of an average retiree are not given the required priority to allow for the COLA to adequately measure up against the effects of inflation that is being felt by seniors in actuality. A TSCL report from 2024 also revealed that, “the buying power of a Social Security dollar tumbled by 20% from 2010 to 2024.”
While the existing 2026 COLA estimates are still subject to change as the final month of the third quarter progresses, it is not likely that it will drop below 2.7%. This is due to the effects of President Donald Trump’s trade policy and tariffs, the effects of which are slowly but surely trickling down to consumers with each passing day.