The 2026 Social Security cost-of-living adjustment (COLA) is shaping up to be a modest boost, with early estimates at 2.5% to 2.1%, according to preliminary forecasts from foremost benefits experts and advocacy organizations. The estimated COLA would be another year of comparatively modest benefits boosts, in line with the trend of moderating inflation that was seen through much of 2025.
Current projections and expert analysis
The Senior Citizens League (TSCL) has been monitoring 2026 COLA projections since the early part of 2025 and they have been growing higher over the past few months. Their new projection of 2.5% is the fourth straight monthly increase in their estimate. That is higher than their estimate from March at 2.3% and their previous estimate in February of 2.4%.
Independent Medicare and Social Security policy analyst Mary Johnson offers a similar but slightly differing opinion, with her most recent estimate at 2.5% COLA in 2026. Johnson’s estimate based on May 2025 inflation data is similar to that of TSCL but reports have put hers as low as 2.1% to 2.2% in recent months.
Explanation of how the COLA calculation process functions
The Social Security Administration calculates the annual COLA based on a certain process implemented in the 1970s. The process employs the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which monitors changes in prices on the goods and services bought by urban wage and clerical employment workers.
The SSA looks at the third quarter of this year (July, August, and September) compared to the third quarter of last year. If there is a higher cost, that percentage is the COLA for the following year, with the percentage rounded down to the closest tenth of one percent. Most notably, if the costs remain the same, or even go down, no COLA is given.
The third-quarter emphasis causes inflation numbers during July-September 2025 to be the cause of determining the final 2026 COLA, with a release forthcoming in October 2025. The timing is consistent with the Bureau of Labor Statistics publishing September inflation figures, historically around October 10th.
Economic factors affected in the 2026 forecast
New inflation data have yielded conflicting results that could impact the final 2026 COLA calculation. The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.4% over the past 12 months to May 2025, but the more relevant CPI-W gained 2.2% for the 12 months ended May 2025. These figures represent continued moderation from pandemic highs of inflation that drove higher COLAs in 2022 and 2023.
Today’s inflation environment is miles away from the recent past years when Social Security beneficiaries experienced large increases: 8.7% in 2023, 5.9% in 2022, and 3.2% in 2024. The proposed 2.5% increase for 2026 would be equal to the 2025 COLA and the lowest increase since 2021, when there was only a 1.3% increase.
Trump administration tariff policies
One of the largest wildcards in the 2026 COLA calculation is the possible inflationary effect of President Trump’s tariffs. Some economists are of the opinion that the tariffs imposed in 2025 may balloon consumer prices later this year, which may affect third-quarter CPI-W data.
Former Treasury Secretary Janet Yellen has ascribed Trump’s tariffs to drive inflation up to “at least 3% year-over-year.” However, the price impact of tariffs has so far been subdued in 2025, with companies adopting a range of tactics to pass on less cost, such as front-loading stock purchases and absorbing tariff costs temporarily.
Financial markets already are discounting higher second-half 2025 inflation expectations, and inflation expectations are right now at 2.84% based on Bloomberg data. What that implies is that the ultimate 2026 COLA might well be greater than initially estimated if tariff impacts prove accurate within the decisive third-quarter estimation period.
Data quality issues and collection problems
One troubling trend that impacts COLA computation is severe problems within the Bureau of Labor Statistics (BLS), the government agency that gathers the price data on which COLA computation is founded. Hiring freezes and budget constraints have prompted the BLS to cut back on data gathering, and the integrity of future inflation measurement has been brought into doubt.
The agency has suspended price data collection in Lincoln, Nebraska; Provo, Utah; and Buffalo, New York, while reducing the scope of surveys in other areas. More troubling, economists report that approximately 30% of the May 2025 CPI data consisted of estimates rather than actual collected prices, representing three times the historical average.
Federal Reserve Chairman Jerome Powell has expressed concern about this deteriorating data quality, noting that unreliable economic statistics create “greater difficulties for the private sector” and policymakers. The reduced reliability of CPI data could lead to COLA calculations that don’t accurately reflect actual inflation experienced by seniors.
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