The predicted 2026 Social Security cost-of-living adjustment (COLA) — expected to fall between 2.2% and 2.5% — would be the smallest increase since 2021. While the Senior Citizens League (TSCL) raised its forecast to 2.4% in May, others remain cautious, sticking with 2.2–2.3% as inflation continues to cool. For millions of retirees facing rising healthcare costs and Medicare deductions, the central question remains: will a 2.5% COLA be enough to keep up?
Expert forecasts: Narrowing range of estimates
Analyst estimates for the 2026 COLA have inched upward over the past few months but are still modest relative to pandemic-era boosts.
- The Senior Citizens League (TSCL): TSCL, one of the leading advocacy groups for retirees, increased its 2026 COLA estimate to 2.4% in May, up from 2.3% in April and 2.2% in March. The revision came after a slight increase in inflation, however still less than the 2025 COLA of 2.5%. According to TSCL, this would be the lowest COLA since 2021’s 1.3% increase, indicating post-pandemic stabilization of inflation.
- Kiplinger and independent analysts: Cautious Optimism: Kiplinger and independent analyst Mary Johnson also predict a 2.2–2.3% COLA, based on low-key inflation patterns and the CPI-W’s more limited focus on urban wage earners. Those are in line with MarketWatch’s 2.3% prediction, which further states that the 2026 boost would be lower than the 20-year median rate of 2.6%.
Latest CPI data sparks debate
A June 4 article in 247 Wall St. had projected an increase to 2.5% using April’s CPI-W data, reporting a year-over-year gain of 2.1%. But that is speculation, since the official COLA is computed from third-quarter (July–September) CPI-W averages released in October.
COLA is calculated based on the CPI-W, which is a component of the Consumer Price Index for wage earners and clerical workers. The measure has been criticized for not taking into consideration seniors’ spending, specifically healthcare and shelter that overlap retiree budgets.
Many advocates favor switching to the CPI-E (Consumer Price Index for the Elderly), which places greater weight on medical expenses. For example, if CPI-E had been used in 2023, the COLA could have been 10.8% rather than 8.7%. However, shifting to CPI-E remains politically controversial.
Financial realities facing retirees
TSCL’s 2025 Senior Survey reveals the growing economic pressure on older Americans:
- 20% of seniors pay over $1,000/month on medical expenses.
- 57% get by on less than $2,000/month in take-home pay.
- 94% felt the 2025 COLA (2.5%) was not sufficient to keep up with rising prices.
Medicare fees and Part B premiums still gobble up COLA gains. For example, a 2.5% COLA could increase the average benefit by $49/month, but Medicare deductions could take a big bite of that gain.
Near-term readings for inflation are trending downward from pandemic peaks, with CPI-W advancing 2.1% in April (vs. 2.2% in March and 2.7% in February). External influences—trade policy, drug price reform, etc.—may play a role in future revisions.
Trump’s executive order on drug costs
President Trump’s May 2025 executive order to reduce prescription drug prices by bringing U.S. prices into alignment with other nations could help save healthcare costs for seniors, but its effect on the 2026 COLA is uncertain since the order targets long-term prices, not short-term inflation.
Experts also point to market volatility and Trump administration tariffs as potential supply chain disruptors that might bring back inflation. Such threats underscore the inaccuracy of COLA projections based on smooth price trends.
2026 projections: Resilience to lower purchasing power
A 2.5% COLA would even leave retirees with lower purchasing power. Illustrative example:
- A retiree earning $2,000/month would receive a $50/month boost, but Medicare premiums could increase by $20–$30, leaving just $20–$30.
- Medical and shelter expenses, which have exceeded overall inflation, may further tax budgets.
Retiree recommendations
- Review Medicare plans: Maximize Part D or Advantage plans to reduce drug expenses.
- Examine supplemental income: Review part-time earnings or annuities to augment fixed incomes.
- Join policy advocacy: Advocate for passage of the CPI-E or increasing COLA protections.
The 2026 COLA is poised to deliver a modest raise, but retirees face an uphill battle to maintain living standards.
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