The Senior Citizens League (TSCL) and independent analyst Mary Johnson have updated their estimates for Social Security’s 2026 Cost-of-Living Adjustment (COLA) to 2.5%, up from the prior estimates of 2.3% and 2.4%. The hike, small as it is, is the fourth consecutive month COLA estimate bump and the same 2.5% increase received for 2025.
The updated projection arrives with inflation still settling after pandemic-era highs that produced huge COLAs of 5.9% for 2022 and a record 8.7% for 2023. In effect, if realized, the 2.5% rise would come to about $50 more a month for the typical Social Security beneficiary, whose monthly check in 2025 is about $1,997.
Impact on retirees’ financial security
For the roughly 75 million Americans who receive Social Security benefits, this adjustment represents an annual increase of about $600. While any increase helps offset rising costs, many seniors may still face financial challenges as the projected COLA remains below the historical average of 2.6% over the past two decades.
The conservative COLA estimate arrives as retirees already are contending with mounting costs of basic items. Home prices, including homeowner insurance premiums fueled by climate threats, keep rising nationwide. Property taxes are burdening long-term homeowners with increasingly higher costs, and utilities, particularly electricity, will be sure to continue rising through 2026.
Issues regarding accuracy of inflation measurement
One of the major issues stemming from the COLA projection is the government’s capacity to measure inflation impacting retirees precisely. The Bureau of Labor Statistics (BLS) is under unprecedented difficulty in gathering data for the Consumer Price Index (CPI) on which the COLA is calculated because there is a shortage of employees owing to a federal hiring freeze.
The BLS has been compelled to decrease the number of companies where it takes price readings for the CPI report and has totally halted data collection in several cities, including Lincoln, Neb., Provo, Utah, and Buffalo, N.Y. In April, the agency said it relied on less accurate means of estimating prices more frequently than normal owing to labor shortages.
“Erroneous or deceptive information in the CPI considerably boosts the chances that seniors are being paid a COLA short of true inflation,” said Shannon Benton, TSCL Executive Director. This is especially alarming because 80% of the seniors surveyed by TSCL assumed that inflation for 2024 had been more than 3%, more than the 2.5% COLA they received.
CPI-W vs. CPI-E: How to calculate retiree inflation
One of the long-standing concerns is whether the government calculates Social Security COLAs using the appropriate inflation index. Increases are currently based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation facing working-age Americans.
Most experts contend that the CPI-W is not representative of retirees’ consumption levels, which spent more money on healthcare and shelter—two categories that historically have a higher rate of inflation. A different metric, the Consumer Price Index for the Elderly (CPI-E), consistently has senior citizens facing greater inflation rates.
Studies suggest that if the CPI-E was used instead of the CPI-W, the 2024 COLA would be 4% instead of the present 3.2%. Such a difference accumulates over time, and it can ultimately end up costing retirees thousands of dollars throughout their retirement lifetime.
On to the official announcement
The Social Security Administration will formally announce the 2026 COLA in October 2025, after third-quarter inflation readings. In the meantime, forecasts could still differ, especially if President Trump’s tariffs start affecting consumer prices heavily. To read on other estimates, readers can go through this article, COLA 2026 Weekly Roundup – All the projected Social Security increases and key news you need to know to end the week of June…
For now, retirees can anticipate a small 2.5% boost with the knowledge that their actual inflationary rate might vary from official reports by virtue of their own spending habits as well as possible data-gathering difficulties facing government measures of inflation.
