We won't know the official 2026 Social Security COLA until mid-October, but there's enough data out there for a pretty accurate estimate. After all, the Social Security COLA is based on third-quarter inflation data, and we've already seen the official numbers from July and August -- all that is missing is September's data.
With that in mind, the latest estimate from the Senior Citizens League is for a 2.7% COLA that will be effective starting with the payment beneficiaries receive in January 2026. This has been increased significantly from earlier estimates -- for example, the same organization published an estimate in February that called for a 2026 COLA of just 2.2%.
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At first glance, this might sound like good news for retirees. And it is, at least in the sense that the amount they receive each month will increase more than previously expected. But there are two big reasons why the 2026 Social Security COLA might not be enough.
1. Senior-specific inflation is more than 2.7%
As mentioned, the Social Security COLA is based on third-quarter inflation data. But the specific data it uses is the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W for short. And as the name suggests, this is designed to show how prices are increasing for the typical worker, not the typical retiree.
Just to name a few examples, seniors generally spend more on healthcare as a percentage of their income, and also tend to spend a greater percentage of their income on housing.
There is a senior-specific inflation calculation known as the CPI-E, which adjusts for costs as they relate to older Americans. And this has steadily outpaced CPI-W inflation by 0.1%-0.2% in the typical year. 2025 isn't shaping up to be much different -- in fact, according to August inflation data, the CPI-E increased by about 3.1% over the past year, significantly more than the expected COLA.
In short, this means that the expected 2.7% COLA might not quite help seniors keep up with rising costs.
2. Medicare premiums
Nearly all Social Security beneficiaries over the age of 65 pay their Medicare Part B premiums directly from their benefit checks -- similar to a payroll deduction for health insurance.
For 2026, Medicare Part B premiums are expected to be $206.50 per month, an 11.6% increase from 2025 levels.
In other words, retirees will be paying $21.50 more per month for their Medicare Part B premiums. The average Social Security retirement benefit is right around $2,000 per month, so the 2.7% COLA would mean an extra $54 per month for the typical retiree. But after accounting for the increase in the Medicare premium, they will only see an additional $32.50 in their monthly payments.
So what about the 2026 COLA?
As mentioned, we'll have to stay tuned to see what the actual 2026 COLA will be, but since we have most of the data the SSA will use to calculate it, it's safe to say that 2.7%, plus or minus a tenth of a percentage point, is highly likely.
While it will certainly help retirees keep up with rising costs to some degree, it might not be enough to maintain the same purchasing power. Not only are costs increasing faster than 2.7% for seniors, but the increased Medicare premiums make the effective COLA significantly less than a 2.7% raise.
