October 15th is likely a date that all beneficiaries of the Social Security program have marked in their calendars. This is because October 15th is the date on which the Social Security Administration (SSA) will announce the exact figure by which benefits will be increased in the new year. This is known as the COLA, or Cost of Living Adjustment announcement.
The Cost of Living Adjustment is an increase implemented to all benefits in the Social Security program so as to help the benefit check retain its buying power in the face of inflation. Unfortunately, many seniors and advocacy groups alike feel that the subset of CPI data that is used to determined the annual COLA does not adequately counter the effects of inflation felt by seniors.
Throughout the course of the year, experts often share estimates for the next COLA using the inflation data available to date. The latest projection has been shared by The Senior Citizen’s League (TSCL) based on July data shared by the Bureau of Labor Statistics. According to TSCL’s estimates, the 2026 COLA is currently projected to be 2.7%, bringing it up marginally higher than that of the 2025 COLA which came in at 2.5%.
How is the Social Security COLA determined?
Each year, the COLA is calculated using a specific subset of the CPI called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Bureau of Labor Statistics releases the CPI-W on a monthly basis throughout the year which allows for experts to provide seniors with a rough idea of what to expect for their next COLA. The CPI-W has over two hundred pricing categories such as, food, transportation, housing, and healthcare. Each category in the CPI-W carries a different weight in the overall calculation as well.
As such, in order to determine the COLA, the SSA takes the CPI-W for the third quarter of the current year and measures it against the third quarter CPI-W of the previous year. If there is an increase, all benefit amounts are increased by that percentage figure in the new year. If there is a decrease from the previous year to the current year, the next COLA will simply default to 0.0%. This means that your benefits will never be reduced due to a drop in inflation rates.
Is the 2026 COLA shaping up to be a wash?
When calculating COLA estimates, TSCL uses the CPI, as well as the Federal Reserve interest rate, and the national unemployment rate, and according to their latest update, the 2026 COLA could possibly come in at 2.7%. The unfortunate news for seniors is that this modest bump might not suffice for the effects of inflation and other rising costs such as Medicare premiums which are projected to increase in 2026.
According to the Congressional Research Service, “using the R-CPI-E instead of CPI-W would’ve resulted in a higher COLA in 33 of the last 39 years (the exceptions are 2005, 2008, 2011, 2018, 2021, and 2022).” This measure of inflation would be a more suitable choice when determining the COLA since it is a metric that focuses specifically on the spending habits of seniors aged 62 and older which is the age at which Social Security can be claimed.
The CPI-W, on the other hand, focuses on the spending habits of a much younger cohort (i.e the current workforce) who will likely place spending importance on a much different set of goods and services than that of an average senior citizen. According to research from TSCL — who also advocates for switching over to the CPI-E and away from the CPI-W — Social Security beneficiaries “have lost around 20% of their purchasing power since 2010.”
“Social Security checks aren’t keeping up with inflation. If four in five seniors think inflation was higher than the government reported in 2024, maybe we should stop questioning their experiences and start questioning why the COLA is failing to measure them,” TSCL Executive Director Shannon Benton noted.