The 2026 Social Security Cost-of-Living Adjustment (COLA) is shaping up to be significantly lower than recent years, according to early projections from experts. The nonpartisan Senior Citizens League (TSCL) anticipates a 2.3% increase, citing an expected slowdown in inflation over the next year. Meanwhile, Social Security and Medicare expert Mary Johnson predicts a slightly lower 2.1% increase.
While the final COLA won’t be announced until October 2025, these forecasts provide an early glimpse into how benefits may change. If inflation continues to ease, seniors could see a more modest boost in their monthly Social Security payments compared to previous years.
Adding to the discussion, TSCL highlights that eliminating Social Security benefit taxes—a proposal gaining traction—could result in an average annual savings of $3,000 per senior household if enacted in 2025.
Why Does COLA Matter?
The Cost-of-Living Adjustment (COLA) is a crucial mechanism used by the Social Security Administration (SSA) to ensure benefits keep up with inflation. It helps retirees and other beneficiaries maintain their purchasing power as the cost of everyday goods and services rises.
However, COLA doesn’t always fully account for the actual expenses seniors face. According to the Consumer Price Index for All Urban Consumers (CPI-U), key costs for retirees remain on the rise:
- Medical services: Up 2.7% in the past year
- Shelter costs: Up 4.4% over the trailing 12-month period
With living expenses increasing at different rates, many retirees still struggle to make ends meet, even when COLA adjustments provide a small boost.
How Is COLA Calculated?
The Social Security Administration bases the annual COLA on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It compares inflation rates from the third quarter (July, August, and September) of the current year to the same period in the previous year.
If prices increase, Social Security benefits rise accordingly. However, if inflation remains low or declines, COLA adjustments are smaller—sometimes even zero, as seen in 2010, 2011, and 2016.
Frequently Asked Questions (FAQs)
1. When will the official 2026 COLA be announced?
The Social Security Administration will release the official COLA for 2026 in October 2025, based on third-quarter inflation data.
2. How much will my Social Security check increase with a 2.3% COLA?
If the 2.3% increase holds, the average Social Security benefit—currently around $1,900 per month—would increase by about $44 per month, or $528 per year.
3. Why is COLA expected to be lower in 2026?
COLA is tied to inflation, which has been cooling in recent months. Lower inflation means a smaller adjustment to Social Security payments.
4. Will eliminating Social Security taxes really save seniors money?
Yes. If Social Security benefit taxes were removed in 2025, the average senior household could save around $3,000 per year, according to TSCL. However, whether this change will be implemented remains uncertain.
5. Can Social Security benefits ever decrease?
No, Social Security benefits cannot be reduced due to a negative COLA. In years where inflation is flat or negative, COLA remains at 0%, meaning payments stay the same.
Final Thoughts
While the anticipated 2.3% COLA for 2026 may seem small, it’s important to remember that it reflects an overall slowing of inflation. However, many retirees still face rising costs in areas like housing and healthcare, making additional financial planning crucial.
Seniors should stay informed and monitor upcoming legislative changes, especially regarding potential tax relief on Social Security benefits. The coming months will be key in determining how much of an impact these adjustments will have on retirees’ financial well-being.