There are currently well over 70 million beneficiaries of the Social Security program, many of whom rely primarily or solely on their monthly benefit income to get by. Due to relying on a fixed income, the effects of inflation can often be far more detrimental to this vulnerable cohort when compared to the average working individual who still has a chance of having their income raised.
As such, the Social Security Administration (SSA) implements an annual increase across all benefits disbursed by the agency. This is called the Cost of Living Adjustment, or COLA. Since 1975, the COLA has been automatically calculated and implemented. The COLA is determined using data from the CPI-W for the third quarter of the year. The 2026 COLA figure was meant to be announced on October 15th, however, due to the federal government shutdown, the announcement has now been pushed back to October 24th.
A new report from The Senior Citizen’s League (TSCL) has revealed that the data index used in the COLA calculation is costing seniors thousands of dollars in benefits due to a lack of accuracy relative to costs held by seniors. Here is what you need to know.
How is the COLA determined?
Each year, the SSA takes the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year and measures it against the CPI-W for the third quarter of the previous year. If there is a year over year increase, this becomes the next COLA. For 2025, the COLA brought to seniors a 2.5% increase. Based on the July and August data that is available, TSCL has projected a COLA of 2.7% for the upcoming year, noting that this will be an average COLA increase from a historical standpoint.
Is the index used to calculate the COLA accurate?
TSCL has previously stated that it advocates for changing the index used in the COLA calculation from the CPI-W to the CPI-E (Consumer Price Index for the Elderly), with the majority of seniors agreeing as per a previous TSCL study.
On October 15th, the nonpartisan senior advocacy group issued a release outlining how seniors are losing out on thousands of dollars in Social Security payments due to “bad government policy”. According to TSCL’s analysis, “the average senior who retired in 1999 has lost nearly $5,000 in Social Security payments as a result of the government using the wrong price index to calculate Cost-of-Living Adjustments (COLAs).”
“Seniors are tired of hearing that ‘no cuts’ is the best the government can offer them on Social Security. Our research shows that 93 percent of older Americans believe Social Security reform should be a high priority or top priority for the Trump Administration and Congress. They’re telling us they want change, and while switching to the CPI-E certainly won’t fix everything, at least it’s a start,” TSCL executive director Shannon Benton wrote.
TSCL further notes that the cost of using the incorrect index for seniors is growing more and more with each passing year. By the group’s calculations, “the average person who retired in 2014 will lose about $8,000 of benefits across a 25-year retirement from using COLAs calculated with the CPI-W instead of the CPI-E. For someone who retired in 2024, we project that number to rise to just over $12,000.”
Under its key insights in the report, TSCL also notes the following: “The CPI-E has outperformed the CPI-W 69 percent of the time across the last 25 COLAs. On average, the CPI-E comes in at 2.7 percent, while the average CPI-W comes in at 2.6 percent. The CPI-E puts more emphasis on areas where seniors tend to spend more of their budget than younger Americans, such as housing and medical care.”
”Continuing to calculate COLAs with the CPI-W when the CPI-E is already available is a great example of how Congress refuses to make even small changes that would benefit seniors. It’s not as if switching to the CPI-E would involve setting up some new metric. It already exists, and by definition, it’s better for American seniors,” Benton further noted.