Here's How Your 2026 Social Security COLA Will Be Calculated -- and Why It May Fall Short

Oct. 15 was supposed to be a big day for Social Security. That was originally going to be the day when the Social Security Administration (SSA) announced an official 2026 cost-of-living adjustment, or COLA.

But thanks to the government shutdown, that COLA announcement has been delayed to Oct. 24. Hopefully, if all goes smoothly, the SSA should be able to make a number of key program updates that day, including Social Security's new maximum monthly benefit, as well a new wage cap and earnings-test limit.

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Meanwhile, it's important to understand how the SSA calculates COLAs -- and why it's a flawed system.

How Social Security COLAs are calculated

The purpose of Social Security COLAs is to help ensure that beneficiaries are able to maintain their buying power as inflation pushes living costs upward. It used to be that lawmakers had to actively vote in a COLA each year.

But COLAs have been automatic since the 1970s. This means that when there's a rise in inflation, Social Security benefits are eligible for a bump.

The inflation gauge used to measure Social Security COLAs is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When there's a rise in the CPI-W during the third quarter of the year compared to the previous year, Social Security benefits go up. When there's no increase in the CPI-W year over year during the third quarter, or a decrease, Social Security benefits stay where they are.

The government shutdown delayed the release of CPI-W data from September. That data was supposed to be available on Oct. 15, and the SSA was supposed to make a COLA announcement shortly after. Since that didn't happen, the COLA reveal has been pushed off.

Why 2026's Social Security COLA may not do much for you

The fact that Social Security COLAs are automatic is a good thing, as it eliminates the bottleneck of lawmakers having to vote a raise in. The problem, rather, lies in the index used to measure COLAs.

The CPI-W may do a good job of measuring the costs of urban wage earners and clerical workers. But the typical Social Security recipient doesn't fit that category.

Many Social Security beneficiaries are retired and therefore aren't wage earners. And the spending patterns of retirees tend to differ from those of working-age Americans.

Perhaps the biggest gap in the CPI-W is that healthcare costs do not carry a lot of weight. But healthcare costs tend to rise substantially from year to year, and they're a big expense for Social Security recipients specifically.

For this reason, retirees have been struggling with inadequate COLAs for years, and advocates have been pushing to change the way COLAs are measured. If a senior-specific index were to be used, it could lead to larger COLAs. And that, in turn, could help more retirees stay afloat financially.

Don't bank on Social Security alone in retirement

At this point, seniors shouldn't have to wait too much longer to find out what their upcoming COLA will amount to. But it's also a bad idea to be too reliant on those raises, or on Social Security itself, for that matter.

Social Security will only replace about 40% of your preretirement paycheck if you earn a typical salary. And with meager COLAs, those benefits may not go very far.

If you're still working, make every effort to try to boost your retirement savings so you don't end up overly dependent on Social Security and its COLAs to keep up with your costs. Having access to income outside Social Security is an important thing, and one that could spell the difference between living comfortably in retirement or struggling continuously.

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