Social Security is one of the main sources of income for millions of American retirees, and each year, the Cost-of-Living Adjustment (COLA) determines how much those benefits increase to keep pace with inflation.
After a couple of years of modest boosts, some estimates suggest that Social Security benefits could rise more than expected in 2026, with the COLA potentially higher than originally forecast. Here’s why that may happen, how it could affect beneficiaries, and what economic pressures are behind the shift.
Understanding COLA: How Social Security benefits are adjusted
The Social Security Administration computes benefits each year using the COLA, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a metric tracked by the Bureau of Labor Statistics (BLS). The SSA computes in each fall season whether there has been an increase between the third quarter of this year (July to September) and the third quarter of last year. Benefits will be increased by that amount if there is an increase come January.
For example, if inflation is high, the COLA is larger, increasing monthly payments. If inflation is low, the increases are small.
Why 2026 may see a bigger COLA
1. Increasing inflation pressures
Recent data from the BLS shows inflation running slightly ahead of projections early in 2025, as outlined in this article: The change in the COLA adjustment for 2026 with the new inflation data – This is how Social Security checks would go up with current U.S. May prices.
The main drivers are:
- Ongoing wage and housing expenses.
- Food and energy prices volatility caused by worldwide supply chain disruptions.
If these trends persist into Q3 2025, the CPI-W could come in significantly higher than in 2024, resulting in a larger-than-expected COLA for 2026.
2. Historical precedents
The 2022 COLA was 5.9%, and the 2023 COLA surged to 8.7% — the largest increase in over four decades — driven by post-pandemic inflation. Although the 2024 and 2025 COLAs dropped to 3.2% and 2.5% respectively, some forecasts from sources such as The Motley Fool and The Senior Citizens League suggest the 2026 COLA could return to the 4–5% range if inflation accelerates.
Current official projections remain more conservative — in the 2.3% to 2.4% range — but these could be revised upward depending on summer inflation data.
3. Real-world effect on retirees
For the typical retiree with a monthly benefit of $2,000, a 5% COLA would translate to an additional $100 per month, or $1,200 annually. For those with higher benefits, the hike is that much larger. The adjustment is crucial to seniors who are dealing with higher healthcare, housing, and other day-to-day costs.
COLA increases over the last ten years
| Year | COLA (%) |
| 2016 | 0.0 |
| 2017 | 0.3 |
| 2018 | 2.0 |
| 2019 | 2.8 |
| 2020 | 1.6 |
| 2021 | 1.3 |
| 2022 | 5.9 |
| 2023 | 8.7 |
| 2024 | 3.2 |
| 2025 | 2.5 |
| 2026 | Forecast: 2.2–2.4%. 4-5% if inflation continues to rise |
What retirees should know
- COLA is automatic: Beneficiaries do not have to do anything to get the increase.
- Timing: October 2025 announcement and January 2026 effective date.
- Uncertainty: The final COLA is based on inflation up to September 2025. The increase might be less if inflation moderates.
According to economists and the SSA, COLA is an important protector of seniors. But very high inflation can run ahead of increases in less time than adjustments can catch up. Which is why a bigger COLA, while maybe good news, is usually merely keeping abreast of increasing costs and not necessarily increasing real income.
The combination of lingering inflation, new tariffs, and economic uncertainty could push the 2026 Social Security COLA to its highest level in several years. While this is encouraging news for retirees, it also underscores the importance of tracking inflation closely — and staying informed about how the COLA affects retirement income.
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