According to the newest estimates from The Senior Citizens League, a nonpartisan advocacy organization, it is projected that Social Security beneficiaries will see a cost-of-living adjustment (COLA) of about 2.7% for 2026. This increase is more than that of the 2.5% COLA received by recipients in 2025 and may amount to an additional $54.18 per average retiree, bringing the monthly check from $2,006.69 to $2,060.87.
Indeed, the projection has been steadily increasing among the rest of 2025, starting at 2.2% in March and coming up to the current 2.7%, relying on July inflation data. Mary Johnson, an independent Social Security analyst, also adds her agreement to this adjustment projection. That is, she also predicts a 2.7% adjustment for 2026.
How the inflation data affects the COLA
It happens that the Social Security Administration calculates the annual COLA using CPI-W-the Consumer Price Index for Urban Wage Earners and Clerical Workers-from the third-quarter time period-July, August, and September. The final 2026 COLA would not be announced until October of 2025 when all three months’ data become finalized.
Recent inflation patterns showed CPI-W basically unchanged at a level of 2.5% above a year-ago level through July 2025. Although the inflation peak of 9.1% in 2022 has tamed remarkably, it still gnaws at the minds of retirees who have suffered declining purchasing power over several decades.
The Medicare Premium “Catch” erodes real benefits
Here comes the catch as retirees might enjoy a 2.7% hike in COLA. Medicare Part B premiums are expected to rise from $185 in 2025 to $206.50 per month, an increase of $21.50. This increase is also the largest in dollars since 2022.
For most Social Security recipients, premiums for Medicare Part B are deducted automatically from their monthly benefits. This means that almost 40% of the anticipated monthly increase from COLA will eat itself up just from increased Medicare costs. It would, therefore, become $54.18-$32.68 once the effects of the premium hike were considered.
The retiree inflation disconnect
The small COLA projection reflects a fundamental issue: The CPI-W index that dictates adjustments is not appropriately reflective of the actual inflation rates experienced by retirees. Healthcare costs, which consume a disproportionate portion of seniors’ budgets, rose, on average, 5.3% annually over the last 30 years–twice the general rate of increase.
In a study conducted by The Senior Citizens League, it was found that Social Security benefits had almost lost around 20% of their purchasing power since 2010. This happens because COLA calculations are based on data that are often old months and as such, they fail to keep pace with the real-time inflation beneficiaries are exposed to.
The COLA Catch-22 dilemma
Seniors are said to have fallen into a so-called “COLA catch-22,” which means they enjoy possessing greater money amounts in their pockets with the advisable higher COLA values, but only if inflation has risen such that it makes everything else expensive. Conversely, lower COLAs promise manageable inflation but not adequate funds to meet the rising costs-with healthcare and housing being the worst affected in this regard.
Creating a no-win situation which keeps pushing retirees against one wall or another depending on the high or low COLA in any given period. The projected 2.7% adjustment will “probably not” be enough to cover the inflation rates that we’re headed into, warned labor economist Teresa Ghilarducci at The New School.
Planning for the retirement reality
The 2026 ratings make it necessary to accept that a retiree relying solely on Social Security alone is not likely to be secure enough during retirement. As Medicare premiums increasingly swallow a bigger chunk of a retiree’s COLA increase and healthcare inflation outpaces rates in general, it becomes vital for retirees to contemplate broader schemes that address the real costs of aging.
Officially the final announcement of the COLA for 2026 will be in October, but that doesn’t change the circumstances underlying the challenges. Like the fact that Social Security does not adjust its inflation protection for retirees enough to keep pace with the rise in costs associated with healthcare and housing, both of which inflate significantly more than the general economy.
