Social Security recipients are expected to receive a 2.7 percent Cost-Of-Living-Adjustment (COLA) in 2026, according to the latest estimate by The Senior Citizens League (TSCL) and independent Social Security analyst Mary Johnson. This represents a slight increase from the 2.5% adjustment received by beneficiaries in 2025, which likely translates into about 54 more dollars added to the average monthly benefit of 2,007 dollars.
Starting with a 2.4 percent estimate earlier this year, the COLA projection for 2026 has been increasing gradually throughout 2025. TSCL has bumped up its estimate for six months running, pointing out that this upward trend “shows increasing risks for a resurgence of inflation.” If indeed the forecast is correct and 2.7 percent holds, it will be the fifth consecutive year with a COLA of at least 2.5 percent; this hasn’t been seen this century.
The final announcement of the COLA will be made by the Social Security Administration on October 15, 2025, based on inflation data from the third quarter, July through September. The Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, is used to calculate the annual adjustment, and data from July 2025 showed a year-over-year increase of 2.5 percent.
Tariff-driven inflation concerns growing
Part of the revision upwards of COLA estimates is attributed to the inflationary impact of the tariff and trade policies of the Trump administration. Both TSCL and Mary Johnson have attributed tariff increases as a factor in their projection of a 2.7 COLA, where Trump’s announcement of a 10% global tariff-rate and higher “reciprocal tariffs” on dozens of countries created some modest upward price pressure.
According to research from the Yale Budget Lab, in the short term, tariffs are projected to generate additional inflation of 1.8 percentage points, equal to about $2,400 loss in household income. This has generated tremendous fear among retirees, with a recent survey from the Nationwide Retirement Institute revealing that half of retirees feel “terrified” as to how tariffs would affect their retirement income or savings.
The survey finds that 63% of retirees have apprehensions that rising tariffs will drive inflation beyond the ability of the Social Security COLA to adequately compensate. After all, the timing of the tariff-induced price increase casts great doubt. If inflation rises as a result of the tariffs before September 2025, then in that case, the beneficiaries could have a larger COLA for 2026. On the other hand, if the tariff effects do not come about until after the COLA calculation is locked, the retirees, in that case, would be faced with rising prices while their benefits do not go up.
The challenge of offset against increasing Medicare premiums
Despite the anticipated increase in Social Security income, this increase may be rendered almost inconsequential for many beneficiaries due to rising Medicare Part B premiums. For 2026, the Medicare Part B premium is going to increase by $21.50 per month to $206.50, up by 11.6%. This remains the single largest dollar increase since 2022, when Medicare Part B premiums were raised by $21.60.
Should the 2026 Social Security COLA be as projected at 2.7%, this Medicare Part B premium increase will offset 39.7% of the average Social Security benefit increase. For beneficiaries receiving $800 or less per month, the Medicare premium increase would effectively wipe out their Social Security COLA gain entirely. The Social Security Administration automatically withholds Part B premiums from many beneficiaries’ payments. As a result, many retirees’ net increase will ultimately readjust to $32.68 per month.
For the high-income beneficiaries, there are other ongoing challenges through the IRMAAs, which are surcharges that inflate the Medicare Part B premiums for those on higher incomes. The surcharges are also likely to increase slightly, estimated by the latest report of the Medicare Trustees at an average of 1.04%.
Steadily declining purchasing power
A small COLA increase comes amid major erosion of purchasing power in favor of Social Security beneficiaries. According to TSCL’s study, Social Security benefits lost 20% of their purchasing power between 2010 and 2024. Its 2024 Loss of Buying Power study indicated beneficiaries would need an extra $4,442 per year on average to regain purchasing power lost since 2010.
Declining purchasing power seems to be more pronounced in the case of older beneficiaries. The TSCL 2023 study informed that older adults retiring before 2000 (85 years old and older now) lost up to 36% of their buying power and need an additional $516.70 monthly to maintain purchasing power since the year 2000.
This erosion occurs because the CPI-W, used to calculate cost-of-living adjustments, does not accurately reflect the spending habits of older Americans, who spend a larger share of their budgets on healthcare and housing, which typically inflate at rates higher than the general economy. Also, since prior-year CPI-W data is used in the calculation of adjustments, beneficiaries bear the brunt of price shocks with no COLA during the current year.
The Nationwide survey demonstrates the great financial pain experienced by actual Social Security recipients. 61% of beneficiaries say they “could not financially survive” if they missed half of the monthly Social Security payment. 55% of current Social Security beneficiaries are of the opinion that their payment does not adequately cover their basic retirement costs.
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