As 2025 draws to a close, attention is turning to how much Social Security benefits may rise in 2026. The annual Cost-of-Living Adjustment (COLA) is meant to help benefits keep pace with inflation. While the official rate won’t be announced until October, analysts and forecasting groups are already offering their projections.
How the COLA is Calculated
The Social Security Administration bases the COLA on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) over the third quarter (July, August, September) compared to the same period the previous year. A rise in that index generally leads to a benefit increase the following January.
However, there are proposals that could affect how COLAs are calculated or applied beginning in December 2026. One option would reduce the COLA by 1 percentage point starting that month. Another would cut it by 0.5 percentage point. A third would switch to a “chained” CPI-W calculation, which would tend to lower the COLA.
Current Forecasts: Around 2.7 Percent
Most forecasts currently point to a COLA of about 2.7 percent for 2026, slightly higher than the 2.5 percent adjustment for 2025.
The Senior Citizens League, a nonpartisan advocacy group, maintains its estimate at 2.7 percent, while some analysts suggest the possibility of a slightly higher 2.8 percent if inflation runs warmer in September. Under a 2.7 percent increase, based on current average benefits, the monthly benefit for a retired worker could increase by roughly $54.
While a higher COLA may seem beneficial, it is important to remember that such increases reflect higher inflation—so the gains in benefits may be offset by rising costs.
Potential Challenges and Offsets
Even if a 2.7 percent COLA is granted, several factors may blunt the net benefit to recipients:
- Medicare Part B premium increases: Premiums are expected to rise significantly in 2026, which could consume much or all of the COLA for many beneficiaries.
- “Hold harmless” protections: Some Social Security beneficiaries are protected from having benefit increases fully eroded by Medicare premium hikes, but the protection doesn’t apply to all recipients.
- Data timing and announcement delays: A federal government shutdown could delay the release of September inflation data, pushing back the official COLA announcement, which is typically made in mid-October.
- Structural changes: Legislative proposals could reduce future COLAs beginning late 2026 through formula adjustments or indexing changes.
What Recipients Should Watch
- Official COLA announcement: The Social Security Administration is expected to announce the 2026 COLA around October 15, once the required inflation data is available.
- Medicare premium changes: Because higher premiums can eat into any benefit increase, recipients should plan accordingly for net changes in their monthly payment.
- Legislative updates: Beneficiaries should monitor proposals that could change how COLAs are calculated or implemented, especially those set to begin in December 2026.
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