Millions of Americans who rely on Social Security cheques can now smile. New estimates for the 2026 Cost-of-Living Adjustment (COLA) show the average retiree can expect to gain about $48 to $54 a month in benefits next year. While this increase is welcome, many are concerned that it will not keep pace with the rising costs that seniors face. Let’s take a closer look at how COLAs work, what the latest projections show, and why others believe that the bump will still fall short of the mark.
How is the Social Security COLA determined?
Social Security benefits are increased annually to keep pace with inflation based on the COLA. The increase is supposed to prevent retirees and other beneficiaries from falling behind when costs rise.
The COLA is computed using a specific measure called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W tracks changes in the price of a basket of goods that urban workers typically purchase.
The government also compares the current year’s third quarter average CPI-W (July to September) with the third quarter average CPI-W of last year. The percent difference between the two amounts is the COLA for next year.
For example, in 2024, the CPI-W increased 2.5% in the third quarter over 2023, and that will equate to a 2.5% COLA for 2025 benefits. The official CPI-W numbers for the third quarter of 2025 will be released by the government on October 15, 2025, and the Social Security Administration will publish the official 2026 COLA later that day.
What are the latest COLA predictions?
Below are some organisations’ predictions based on recent inflation data:
The Senior Citizens League, a nonprofit group, recently increased its 2026 COLA estimate to 2.6%, mirroring the inflation that remains well above estimates.
The Social Security Board of Trustees predicts a 2.7% increase.
The Congressional Budget Office estimates a 2.4% increase.
While these percentages are slightly discrepant, all analysts expect that Social Security benefits will rise by about 2.4% to 2.7% in 2026.
How much will your benefits increase?
To put these percentages in terms of dollars, remember that the June 2025 average monthly annuity for retired workers was roughly $2,005. A 2.4% hike would place it at about $2,053 per month, and a 2.7% hike would place it at about $2,059. This implies the average retiree’s monthly benefit would increase by about $48 to $54.
Other beneficiaries, including survivors, disabled employees, and spouses, would see the same percentage increases on their current benefit amounts.
Why some retirees will still struggle
Most retirees feel that recent COLA increases have not kept up with their actual costs despite this hike. This is mainly because of the reason that the CPI-W, which forms the basis for the COLA, tracks the buying behavior of urban wage earners and not retirees.
Seniors pay a higher proportion of their incomes for medical treatment and shelter—two categories where costs have been rising faster than in the overall CPI-W.
As of June 2025, to illustrate:
- Overall CPI-W inflation had been approximately 2.4%.
- Medical care prices increased 2.8%.
- Housing prices increased 3.9%.
Because the COLA calculation does not exactly register these faster-rising expenses, the 2026 increase could shortchange the most applicable inflation for seniors. This could mean that even with the increase, a good many retirees would still be able to get their benefits, to not go as far as before
The importance of the COLA to Social Security beneficiaries
Social Security provides a lifeline income stream for millions of Americans, especially retirees, disabled workers, survivors, and spouses. The benefit is often their sole or principal source of income for many. That is why the yearly COLA is so important—it prevents recipients from losing purchasing power when prices rise.
A few dozen dollars in extra monthly income can make a big difference to those with fixed incomes.
How to maximize your Social Security benefits
Besides dreaming of higher COLAs, beneficiaries can also do things to maximize their overall Social Security payments:
- Delay benefits: Waiting until the full retirement age or age 70 will increase monthly checks.
- Work longer: Additional earnings will add to your benefit check.
- Time spousal benefits: Couples can plan together to maximize combined benefits.
- Check your earnings record: Correct work history can prevent loss of benefits.
Using these strategies can help boost income and offset lower COLA increases.
When will the official 2026 COLA be released?
The official CPI-W statistics for the third quarter of 2025 will be released on October 15, 2025. On that same day, the Social Security Administration will formally release the actual COLA for 2026.
In the meantime, recent estimates are an educated estimate, but the final number is likely to vary based on summer and early fall inflation patterns.
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