Social Security beneficiaries may see a smaller cost-of-living adjustment (COLA) in 2026 compared to recent years. Early forecasts suggest that the 2026 COLA could be as low as 2.1% or 2.3%, a decline from the 2.5% adjustment in 2025.
While Social Security increases are designed to keep up with inflation, a lower COLA may impact the purchasing power of millions of retirees and disabled individuals who depend on these benefits.
Why the 2026 COLA May Decrease
The Social Security COLA is determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation trends in the third quarter (July to September) of the previous year. In 2025, inflation rates have shown signs of moderation, leading analysts to predict a smaller COLA increase for 2026.
Key factors influencing the projected decrease:
- Slowing inflation: After peaking in 2022-2023, inflation has been gradually declining.
- Federal Reserve policies: Interest rate adjustments have contributed to price stabilization.
- Lower energy and food price increases: Recent economic data suggests a slowdown in these sectors, reducing overall inflation.
How Much Could the 2026 COLA Be?
According to projections from The Senior Citizens League (TSCL), a nonpartisan advocacy group, the 2026 COLA could be around 2.3%, slightly lower than the 2.5% increase in 2025. Meanwhile, independent analyst Mary Johnson suggests it could be as low as 2.1%.
What This Means for Beneficiaries
The average monthly Social Security benefit is approximately $1,976. If the 2026 COLA lands at 2.3%, beneficiaries could see an increase of about $45 per month, bringing the average payment to $2,021. While any increase is helpful, a lower adjustment means recipients may have less financial flexibility amid rising healthcare and housing costs.
How COLA Is Calculated
The Social Security Administration (SSA) determines the COLA based on CPI-W data from July, August, and September of the previous year. The final percentage increase is announced in October 2025 and takes effect in January 2026.
Impact on Seniors and Disabled Individuals
A lower COLA could have several implications:
- Reduced purchasing power: Even with lower inflation, essential expenses such as medical care, prescription drugs, and housing continue to rise.
- Potential legislative action: Some lawmakers are pushing for reforms to better protect seniors from cost-of-living fluctuations.
- Savings depletion: Seniors on fixed incomes may need to adjust their budgets if their benefits do not keep pace with rising costs.
Potential Policy Changes and Legislative Efforts
To help mitigate the financial strain on Social Security recipients, lawmakers have introduced the Senior Citizens Tax Elimination Act, which aims to eliminate federal taxes on Social Security benefits. If passed, this legislation could save eligible retirees an average of $3,000 per year.
However, there are concerns that removing these taxes may impact the long-term stability of the Social Security and Medicare trust funds, which are projected to face financial shortfalls by 2035.
To track legislative efforts regarding Social Security benefits, visit Congress.gov.
What Should Beneficiaries Do?
With the likelihood of a lower COLA in 2026, beneficiaries should consider the following financial strategies:
- Budget adjustments: Planning for smaller-than-expected increases in benefits can help manage monthly expenses.
- Explore supplemental income options: Part-time work or passive income sources can help bridge financial gaps.
- Review Medicare and healthcare costs: Staying informed about potential increases in healthcare premiums can help retirees adjust their budgets accordingly.
- Monitor inflation trends: Keeping an eye on economic indicators will provide a clearer picture of how COLA adjustments might fluctuate in future years.
When Will the Official 2026 COLA Be Announced?
The official COLA for 2026 will be announced in October 2025, based on CPI-W data from the third quarter of the year. Beneficiaries will receive the adjusted payments beginning in January 2026.
For official updates, visit the Social Security Administration’s website: www.ssa.gov
Final Thoughts
While Social Security beneficiaries will still see an increase in benefits in 2026, it is likely to be smaller than in previous years due to slower inflation growth.
For seniors and disabled individuals relying on these payments, it’s crucial to stay informed about economic trends and legislative efforts that could impact their financial well-being.
To ensure you receive the most up-to-date information, follow trusted sources like the Social Security Administration (www.ssa.gov), the Bureau of Labor Statistics (www.bls.gov), and nonpartisan senior advocacy organizations such as The Senior Citizens League (www.seniorsleague.org).
As we move closer to the official 2026 COLA announcement, staying prepared and financially proactive will help ensure stability for millions of Social Security recipients across the country.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
A senior at Yale-NUS College with interests in developmental and labour economics, as well as creative non-fiction and poetry. Currently, I’m studying as an Economics major and an Arts and Humanities minor (focusing on Creative Writing) with heavy involvement in the Singaporean journalism scene and involved in research on economic history and educational policy. I’m working as an author for The Octant, Yale-NUS’ student publication, as a writer for Wingspan, Yale-NUS’ alumni magazine, and as a tutor for the NUS Libraries Writer’s Centre. | Linkedin