Social Security is the cornerstone of many retirees' budgets. But with rising costs for just about everything, many retirees are struggling to keep up with inflation. That's why the annual cost-of-living adjustment, or COLA, gets so much attention. And Aug. 12 could be a key date for determining just how much of a bump retirees will receive in their monthly payments next year.
Aug. 12 marks the release of the Consumer Price Index for the month of July. It's an important piece of data that will factor into next year's COLA. Here's what retirees should look for.
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Mark your calendars for Aug. 12
The annual COLA is based on the average inflation increase in the third quarter of the prior year. That means July, August, and September are the only months that count toward the calculation. Despite a spike in inflation during March, April, and May, seniors have simply had to absorb higher prices in 2026 while awaiting data that will actually impact their monthly benefits. The first piece of data comes on Aug. 12.
Analysts currently expect the commonly cited CPI-U reading to come in at 3.4%. Social Security uses the CPI-W, which adjusts the index to reflect the spending of urban wage earners and clerical workers. The differences are slight and could result in somewhat different numbers, but both the CPI-U and CPI-W tend to move in the same direction.
That's important because top Social Security analysts are currently projecting a COLA much higher than 3.4%. The Senior Citizens League expects next year's COLA to come in at 3.8%. Independent analyst Mary Johnson sees it coming in at 3.7%. Those projections could get a major update on Aug. 12 once the CPI data comes out. It's worth pointing out the Federal Reserve's NowCast projects August CPI growth slowing further to 3.2%, indicating next year's COLA could come in far lower than anticipated last month.
That said, retirees could still see one of the largest COLAs in the last 15 years or so. We've only had three years with a COLA above 3% since 2012 (2022 through 2024). Based on current inflation expectations, 2027 could be another high COLA. Furthermore, a lot could change over the next few weeks, sending prices higher or lower and impacting inflation readings that determine next year's COLA.
But retirees hoping for a COLA that pushes their benefits in line with inflation of the last few months may be sorely disappointed. When we get our first piece of data that goes toward the COLA calculation, it may be a good time to take a look at your budget and determine how a smaller-than-anticipated COLA could impact your finances going forward.
