Cost-of-Living Adjustments are one of the most important features of the Social Security benefits program. Many retirees rely on Social Security to help them cover their essential expenses, and it's important that these retirement benefits don't lose buying power and put seniors in a tough spot. Since the price of goods and services increases each year, benefits must also rise -- and the COLA is what makes that happen.
Unfortunately, the current evidence points to the fact that the 2026 COLA will be far short of where it needs to be for retirees to truly maintain the standard of living that Social Security used to provide.
Here's the problem with next year's Cost of Living Adjustment, along with some details on why benefit increases aren't doing their job and helping seniors thrive.
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Here's your estimated 2026 COLA
First things first. At this point in the year, we don't actually know what the COLA will be for 2026 yet. However, experts at the Senior Citizens League, a senior advocacy group, are projecting a 2.7% benefits increase. The Senior Citizens League can make that projection because we already have some data that will be used to determine the benefits increase.
Cost-of-Living Adjustments are determined using a specific formula that looks at third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-W is prepared by the Bureau of Labor Statistics to provide a snapshot of how much a basket of goods and services costs. The third quarter CPI-W data for this year, 2025, is compared to last year's data from 2024. If prices have gone up, retirees get a cost-of-living adjustment equal to the average increase in the CPI-W numbers from the third quarter of 2024 to the third quarter of 2025.
July's data is available, and we also have all of the CPI-W data for the beginning of the year, so it's possible to measure trends in inflation. Based on all of this information, the Senior Citizens' League came up with its 2.7% COLA estimate.
The 2026 COLA will be $3,792 smaller than it should be for the average senior
Since the average Social Security retirement benefit is $2,006.69 as of July 2025, if the COLA comes in as planned, a 2.7% benefits increase will give the average senior around a $54.18 per month raise (discounting the effects of rising Medicare premiums, which will take some of that money away). That adds up to around $650.17 per year.
While that may seem like a reasonable sum, it's far less than what retirees would need if they were going to truly avoid losing any buying power. That's because, as the Senior Citizens League explains, Social Security benefits have lost around 20% of their buying power since 2010. To rebuild the value of benefits to what they were truly worth in 2010, payments would need to increase by an additional $4,442 per year. That's $3,792 more than the $650.17 estimated increase.
Of course, that won't happen with retirees and the $650.17 benefits increase retirees are on track for won't help seniors make strides in making up for the shortfall -- one that likely exists because using CPI-W to calculate COLAs underestimates the actual inflation retirees experience. That's the case because the spending habits of seniors are not perfectly matched with the spending habits of urban wage earners and clerical workers.
Unfortunately, there's very little retirees can do about the value of their benefits eroding, other than to plan and prepare for this trend continuing during their retirement and to take steps to save enough to support themselves even if Social Security falls short.
