Social Security's 2026 COLA Is Shaping Up to Be a No-Win Scenario for Retirees

Key Points

• With inflation rising, retirees are paying higher prices now but won't receive a benefit increase until later.

• The key inflation metric used to calculate the Social Security COLA doesn't fully reflect retirees' higher costs.

• Less accurate data collection this year could increase the odds that the 2026 COLA doesn't keep up with inflation.

What if your Social Security retirement benefits never increased? The buying power of those benefits would steadily erode over time due to inflation. Many retirees would soon find themselves in dire straits.

The good news is that your Social Security benefits usually increase each year to help keep up with inflation. Since 1975, a cost-of-living adjustment (COLA) has been calculated annually and applied to all Social Security benefits.

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But there's bad news, too. Social Security's 2026 COLA is shaping up to be a no-win scenario for retirees.

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An uncertain COLA but a clear trend

To be sure, we don't know yet what the 2026 Social Security COLA will be. The amount of the benefit increase won't be announced until mid-October. The Social Security Administration must wait for the September inflation data from the U.S. Bureau of Labor Statistics (BLS) before finalizing its calculation of next year's COLA.

However, that doesn't mean we can't have a reasonable idea about what the 2026 Social Security COLA might be as things stand now. Each month, The Senior Citizens League (TSCL), a nonprofit organization dedicated to advocating for seniors, crunches the numbers to project the next COLA.

There has been a clear trend in TSCL's Social Security COLA predictions. For four consecutive months, the projected increase has continued to rise. The organization's latest projected COLA, announced on June 11, 2025, is 2.5%, up from 2.4% the previous month.

This trend is due mainly to slowly rising inflation. And it could keep moving higher. Many economists expect accelerating inflation in the second half of 2025 as the full brunt of the Trump administration's tariffs is felt.

The Social Security COLA is intended to protect benefits from being eroded by inflation. Why would retirees face a no-win scenario if inflation keeps rising? For one thing, the timing works against them. They must pay higher prices now but won't receive a benefits increase until later. The 2026 COLA won't hit Social Security payments until January.

A much maligned metric

There's also another issue. The Social Security COLA is calculated using an inflation metric called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This metric attempts to measure the price increases experienced by blue-collar workers who live in areas with large populations.

But the CPI-W is a much maligned metric. The Libertarian-leaning Cato Institute has called the CPI-W an "outdated measure" that is "riddled with measurement errors." TSCL has pointed out that the CPI-W assumes workers spend around 7% of their income on healthcare, but seniors can spend 16% or more of their income on healthcare.

The primary issue is that the CPI-W focuses on working Americans rather than retirees. In a 2024 study, TSCL found that the disconnect has caused Social Security recipients to lose roughly 20% of their buying power since 2010.

Several organizations, including TSCL, believe that an alternative metric, the Consumer Price Index for the Elderly (CPI-E), would better reflect the impact of inflation on older Americans. However, the CPI-W will be used for the 2026 Social Security COLA calculation -- and it could perpetuate the cycle of retirees receiving a smaller benefit increase than they probably should get.

Suspect data

To make matters worse, the data used to calculate the CPI-W this year could be significantly less reliable than it's been in the past. Why? According to The Wall Street Journal, a hiring freeze at the BLS has forced the agency to use a less accurate method to estimate prices because it doesn't have enough workers to collect the same amount of information as in previous years. If the CPI-W is based on suspect data, the 2026 Social Security COLA will be suspect.

TSCL executive director Shannon Benton said in a press release, "Inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that's lower than actual inflation." She added that this could "cost seniors thousands of dollars over the course of their retirement."

Things could be worse, of course. Any COLA is better than no COLA at all. However, retirees face the prospects of paying higher prices before they receive extra money, a key inflation metric that doesn't fully reflect the prices they pay, and potentially inaccurate inflation data that could skew the COLA amount. Social Security's 2026 COLA really is shaping up to be a no-win scenario for retirees.

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