According to the latest estimates by the Senior Citizens League, the 2026 Social Security cost-of-living adjustment, or COLA, is now expected to provide a 2.7% increase for beneficiaries. This is an increase over the 2.6% projection the same organization made in June, which was already an increase over May. If the latest projection is correct, this would give the average retired worker a monthly raise of about $54.
However, this increased COLA estimate might not be as great as it sounds. There are a couple of big reasons why it might not do a good job of helping seniors keep up with rising prices, so let's take a closer look at why the projections increased, as well as two important points Social Security recipients should keep in mind.
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Why is the 2026 COLA estimate rising?
The short answer is that the 2026 projected COLA is getting higher because of inflation. Specifically, the COLA is based on inflation data (the CPI-W) from July, August, and September. We recently got a look at July's CPI-W reading, and it is 2.5% higher than it was a year ago.
We'll see August's inflation data next month, and then September's in about two months. In mid-October, the official 2026 Social Security COLA will be unveiled.
Two big reasons why the COLA might not be enough
Social Security COLAs are a valuable feature of the program for retirees and other Social Security recipients. They provide annual, inflation-based adjustments designed to help seniors and other beneficiaries keep up with the rising costs of goods and services.
In theory, this makes perfect sense. If the inflation rate in the United States is 3% and benefits are adjusted upward by 3% as well, retirees who receive Social Security won't see any change in their purchasing power.
Unfortunately, it isn't this simple. There's a lot to unpack when it comes to the real impact of the Social Security COLA on seniors' wallets. Here are two good reasons why a 2.7% increase might not be as good as it sounds.
1. The CPI-W is not senior-specific inflation
As mentioned, the Social Security Administration uses the CPI-W to measure inflation. This stands for the Consumer Price Index for Urban Wage Earners and Clerical Workers. In other words, it's intended to measure inflation as it affects working Americans -- not the elderly.
As one example, seniors tend to spend a greater percentage of their income on healthcare costs than the overall population. They also tend to spend more (as a percentage) on housing. And according to the July inflation data, outpatient hospital services and housing costs have increased by 6.4% and 3.7%, respectively -- significantly faster than overall inflation.
In fact, there's a separate inflation metric known as the CPI-E, which is specifically designed to measure inflation on older people. The CPI-E showed a 2.9% increase in July, four-tenths of a percentage point more than the CPI-W. But unfortunately, it plays no role in determining cost-of-living adjustments.
2. Medicare costs are set to rise
If you're a Social Security beneficiary who is 65 years of age or older, you probably already know this, but Medicare Part B premiums are typically paid directly from Social Security benefits. In other words, the premium amount -- which is $185 per month in 2025 for most retirees -- is deducted from the amount each Social Security beneficiary receives.
In 2026, Medicare Part B premiums are expected to be $206.50. That's an 11.6% increase compared to this year.
For the average retired worker, the $54 expected monthly COLA increase would become $33.50 when accounting for the Medicare increase. And for lower-income retirees, this could hit even harder.
As an example, someone who gets $1,400 per month would get a $37.80 raise based on a 2.7% COLA. But it would effectively be just $16 after the expected Medicare increase.
The bottom line on the 2026 COLA
Of course, a 2.7% COLA would be better than nothing, but the point is that the average Social Security recipient is likely to lose purchasing power next year, even after the increase. Looking forward, it's important for all Social Security beneficiaries to keep these factors in mind as they consider each year's adjustment.
