If you are someone who depends on Social Security, there is something happening behind the scenes that you might want to keep an eye on. It is a small change, but it could have a big impact on your benefits starting in 2026.
What is changing with the 2026 social security cola?
Each year, the Social Security Administration gives a Cost-of-Living Adjustment (COLA) to keep your monthly check in line with inflation. This helps your benefits keep up with rising prices. The 2026 COLA will still be based on the inflation numbers, but the data that feeds into that calculation is now coming from fewer places.
- The Bureau of Labor Statistics (BLS) recently stopped collecting price data from three cities—Lincoln, Nebraska; Provo, Utah; and Buffalo, New York.
- This change is due to a staffing shortage caused in part by a hiring freeze.
This may not sound like a big deal, but it could mean the data used to measure inflation is less accurate, which could result in a smaller COLA than retirees deserve.
How does social security calculate the cola?
The formula is pretty simple, but also very specific. Here is how it works:
- The government compares the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September of the current year to the same months from the previous year.
- If there is an increase, that percentage becomes your new COLA for the following year.
So if the inflation rate goes up, your check goes up. But if the BLS is not getting good, solid inflation data, that could throw the numbers off.
Why fewer data points could affect your benefits
The fewer cities included in the data sample, the less precise the CPI-W can be. This is where the concern really starts to build.
Shannon Benton, the Executive Director of the Senior Citizens League, put it clearly when she said,
“If these areas experience higher-than-average inflation, their exclusion could result in an understated national CPI, leading to a lower COLA than warranted, or vice-versa.”
Here is why that matters to you:
- If inflation is underreported, your benefits might not go up enough to keep pace with real-life prices.
- That lower monthly check becomes your starting point for future increases, meaning this year’s COLA affects every COLA after it.
How retirees could feel the impact in real life
Let us break it down in simple terms. A lower-than-needed COLA means:
- Your grocery bill might rise, but your benefit check stays nearly the same.
- You may have to cut back on medications or essentials just to stretch your income.
- Over the years, a lower base benefit will compound, leaving you with less money as time goes on.
You might not feel the hit all at once, but over time, the financial strain builds up—especially if you are already on a fixed income.
How inflation and cola are a double-edged sword
This is where it gets tricky. Lower inflation means prices are stable, which is good. But it also means a smaller COLA.
On the other hand, high inflation gives you a bigger COLA, but it comes after everything already got more expensive. It is like chasing a moving target.
Here is how it played out recently:
- The 2025 COLA was a modest 2.5% because inflation was cooling.
- That meant retirees got smaller increases, even though prices for things like food and rent stayed high for months before.
It is a frustrating situation. Either way, your money feels like it does not go as far as it used to.
Why cola accuracy matters more than ever
Today’s retirees depend on Social Security more than ever. Originally, the system was designed to replace about 40% of your income. But now, that percentage is shrinking.
- If you retire at age 65 in 2025, Social Security will only cover about 39% of your income.
- At the same time, the Social Security trust funds are facing a shortfall. If nothing changes, benefits could be cut by 23% in the future.
This makes it even more important that COLAs are fair and accurate. A miscalculated COLA could quietly drain your spending power while you are just trying to get by.
