More than 70 million Americans receiving Social Security benefits are awaiting the official 2026 cost-of-living adjustment (COLA) announcement, scheduled for October 15. Current projections suggest an increase between 2.7% and 2.8%, which would mark a significant trend but may not fully cover rising costs for many recipients.
Key Takeaways
- The 2026 Social Security cost-of-living adjustment (COLA) is projected to be between 2.7% and 2.8%.
- The official announcement by the Social Security Administration is expected on October 15, based on third-quarter inflation data.
- A 2.7% increase would raise the average retired worker's monthly benefit by approximately $54, to around $2,063.
- Rising Medicare Part B premiums, projected to increase by 11.5%, are expected to reduce the net benefit increase for many seniors.
- Despite recent higher-than-average COLAs, the purchasing power of Social Security benefits has declined by 20% since 2010, according to one analysis.
How the Annual Benefit Adjustment Is Calculated
The primary purpose of the Social Security cost-of-living adjustment is to help benefits keep pace with inflation. This ensures that the purchasing power of monthly payments does not erode over time due to rising prices for goods and services.
The calculation relies on a specific inflation measure: the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks the average change in prices paid by a specific population for a basket of consumer goods and services.
The Q3 Data Is Crucial
The Social Security Administration (SSA) does not use the entire year's inflation data. Instead, the COLA calculation is based exclusively on the average CPI-W readings from the third quarter, which includes July, August, and September.
To determine the adjustment, the SSA compares the average CPI-W from the third quarter of the current year to the average from the same period in the previous year. The percentage difference, rounded to the nearest tenth of a percent, becomes the COLA for the following year. The final piece of data, the September inflation report, will be released by the U.S. Bureau of Labor Statistics on October 15, allowing for the official announcement.
A Shift from Ad-Hoc Increases
Before 1975, adjustments to Social Security benefits were not automatic. Congress had to pass special legislation to increase payments, which happened only 11 times between 1940 and 1974. The adoption of an annual, inflation-indexed COLA was designed to create a more consistent and predictable system for beneficiaries.
Projected Increase for 2026 Benefits
In recent years, beneficiaries have received COLAs that are higher than the average for the preceding decade. This trend was driven by inflationary pressures that followed the COVID-19 pandemic. Benefits increased by 5.9% in 2022, 8.7% in 2023, 3.2% in 2024, and 2.5% in 2025.
If the 2026 COLA meets or exceeds 2.5%, it will be the first time this century that the adjustment has remained at that level or higher for five consecutive years. This would also be the first such occurrence in 29 years.
Recent COLA History
- 2023: 8.7% (Largest since 1982)
- 2022: 5.9%
- 2024: 3.2%
- 2025: 2.5%
- Average since 2010: 2.3%
What Analysts Are Forecasting
Based on inflation data through August, several expert groups have released their projections for the 2026 COLA. The Senior Citizens League (TSCL), a nonpartisan advocacy group, is forecasting a 2.7% increase. Mary Johnson, an independent policy analyst focusing on Social Security and Medicare, has projected a slightly higher adjustment of 2.8%.
"A fifth superior raise in a row sounds good on paper, but the underlying data shows that the inflation measure used by Social Security still falls short of capturing the real-world costs faced by seniors," a TSCL report noted.
Estimated Monthly Payment Increases
Assuming the lower projection of a 2.7% COLA is accurate, beneficiaries can expect a modest increase in their monthly payments. The average benefit for different recipient groups would change as follows:
- Retired Workers: The average monthly benefit, which recently surpassed $2,000, would increase by an estimated $54.22, bringing the new average to approximately $2,063 per month.
- Disabled Workers: The more than 7 million individuals receiving disability benefits would see their average monthly payment rise by about $42.73, to a new total of around $1,626.
- Survivors: For the nearly 5.8 million survivors of deceased workers, the average check is projected to increase by $42.53, reaching approximately $1,618 per month.
Why the Full COLA May Not Reach Beneficiaries
While any increase is welcome, a significant portion of the 2026 COLA is likely to be offset by rising healthcare costs, particularly for those enrolled in both Social Security and Medicare. The annual Medicare Trustees Report provides forecasts for these expenses.
For 2026, the report projects an 11.5% increase in the standard Medicare Part B premium, which covers outpatient services. This would raise the monthly premium to $206.20. Since this premium is typically deducted directly from Social Security benefits, the net increase recipients see in their bank accounts will be smaller than the official COLA percentage.
The Ongoing Issue of Purchasing Power
A more fundamental challenge for beneficiaries is the persistent loss of buying power. Critics argue that the CPI-W, the index used to calculate the COLA, does not accurately reflect the spending patterns of seniors. The CPI-W is based on the expenses of working-age urban and clerical employees, who spend less on healthcare and housing than retirees do.
According to an analysis by The Senior Citizens League, these categories are not weighted heavily enough in the CPI-W. The result is a significant gap between the official inflation adjustment and the actual cost increases seniors face. The TSCL estimates that Social Security benefits have lost 20% of their purchasing power since 2010. Even with another above-average COLA in 2026, this long-term trend of declining real value is expected to continue for most recipients.
