Will the Government Shutdown Impact the 2026 Social Security COLA?

The government has been shut down since Oct. 1, after Congress was unable to pass a funding bill for the new fiscal year that started this month. With severe disagreements between Republicans and Democrats, many government agencies will remain closed indefinitely. Only essential services are allowed to continue operating, and government workers who aren't furloughed are expected to continue working without pay until the shutdown is resolved.

Thankfully for the 70 million Americans receiving monthly Social Security benefits, those payments are considered essential. And for many households that's the absolute truth. An important aspect of the program for households relying on Social Security to make ends meet is the annual cost-of-living adjustment, or COLA. Without it, many of those recipients would find their finances falling behind the rising prices stemming from inflation.

While payments are continuing amid the shutdown, many may be wondering what it means for next year's COLA.

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The key data provider for next year's COLA is shut down

The Social Security Administration is in charge of calculating the annual COLA, but it relies on data provided by another government agency -- the Bureau of Labor Statistics. Every month, the BLS publishes a report detailing changes in the Consumer Price Index, or CPI, which is one of the most common metrics used to assess inflation.

The annual COLA is based on a specific version of the CPI, the CPI for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration takes the average increase in the CPI-W during the third quarter (July through September), and that number becomes the COLA for next year.

Unfortunately, the BLS is not considered an essential service. As a result, it's not releasing new data, including the jobs report that was supposed to come out the first Friday of the month. The most recent update on its website simply states, "This website is currently not being updated due to the suspension of Federal government services."

While we received an update on July and August's CPI readings, September's is currently scheduled for Oct. 15. If the government shutdown isn't resolved by then, we'll face a delay in the release of September's CPI data, and, as a result, the 2026 COLA calculation. (Even if Congress resolves the shutdown earlier, it could take several days to compile the data and publish the report, resulting in a delay.)

The good news is the BLS likely completed its September data collection to get an accurate picture of price inflation during the last month of the quarter. BLS workers collect data throughout the month, dividing it into 10-day periods. With the government shutdown going into effect on Oct. 1, it likely collected all or most of the data needed to accurately calculate the CPI numbers for September.

That means the government shutdown is unlikely to have any impact on the 2026 COLA, even if the release of the information is delayed.

Here's how big the 2026 COLA could be

Despite the potential delay, the 2026 Social Security COLA is shaping up to be a relatively large boost to benefits. As mentioned, we already have CPI reports for July and August, and those have provided a pretty clear picture on where inflation is heading.

The July CPI-W reading came in 2.5% higher than last year and the August reading climbed 2.8%. With fairly soft inflation over the summer last year, many expect the inflation rate continued accelerating in September. The Cleveland Fed's NowCast estimates the September CPI-U reading (which is slightly different than the CPI-W used for the COLA) climbed 3%, up from 2.9% in August.

A similar bump in the CPI-W reading would result in a COLA of 2.7%. That's in line with analyst expectations from The Senior Citizens League. Independent analyst Mary Johnson and the Committee for a Responsible Federal Budget project a 2.8% COLA.

Either way, Social Security beneficiaries are in line for a bigger raise than 2025's 2.5% COLA. But that also means that prices have climbed faster this year, leaving many retirees trying to stretch their monthly payments further.

With most of the data available to make a fairly good guess as to what the 2026 COLA will be, retirees can start planning now even though the actual COLA release may be delayed due to the government shutdown.

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