The Social Security 2026 COLA Forecast Was Just Updated. There's Good News and Bad News for Retirees.

Key Points

• The Social Security Administration will announce the cost-of-living adjustment for 2026 on Oct. 15 after the Labor Department releases September inflation data.

• The Senior Citizens League estimates Social Security benefits will increase 2.7% next year, much higher than the forecast published in January, which called for a 2.1% COLA.

• While Social Security recipients are on track to get a larger COLA in 2026 versus 2025, the pay increase may not fully offset inflation, meaning benefits could lose buying power.

• The $23,760 Social Security bonus most retirees completely overlook ›

The Labor Department will publish September inflation data on Oct. 15. The Social Security Administration (SSA) needs that information to determine the cost-of-living adjustment (COLA) for 2026. The SSA will announce the finalized increase in benefits that same day.

The COLA announcement is always highly anticipated because benefits are an important source of income for retirees. But the stakes are particularly high this year because tariffs imposed by President Trump have already led to a resurgence in inflation, and most Americans expect inflation to accelerate further in the next year.

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The Senior Citizens League, the nation's largest nonprofit advocacy group for senior citizens, has raised its 2026 COLA forecast substantially since the beginning of the year, from 2.1% in January to 2.7% in September. The latest revision comes with good news and bad news for Social Security beneficiaries.

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The good news: Social Security's 2026 COLA will be larger than the 2025 COLA

Social Security recipients receive annual cost-of-living adjustments (COLAs) to shield benefits from inflation. The Social Security Administration determines COLAs based on changes in a subset of the Consumer Price Index, known as the CPI-W. The CPI-W measures how prices change across eight major product categories, weighted based on the spending patterns of hourly wage earners and office workers.

The math is straightforward: The CPI-W from the third quarter of the current year, meaning the three-month period between July and September, is divided by the CPI-W from the third quarter of the previous year. The percent increase becomes the COLA is the next year. For instance, the CPI-W increased 2.5% in the third quarter of 2024, so Social Security benefits got a 2.5% COLA in 2025.

The good news is that Social Security's 2026 COLA will likely be a little more substantial. The last data point is not yet available, but the latest forecast from The Senior Citizens League says benefits will increase 2.7% next year, two-tenths of a percentage point more than benefits increased this year.

The average Social Security benefit for retired workers was $2,008 per month in August 2025. After a 2.7% COLA, the average payout would increase to $2,062 per month, meaning the average retired worker would receive an additional $54 per month next year if the current forecast is accurate.

The bad news: Social Security's 2026 COLA will probably be too small

The CPI-W measures inflation based on the spending habits of individuals in the workforce, but members of that population segment are usually much younger than retired workers on Social Security, and young people spend money differently than seniors.

The most consequential examples are housing, medical care, and transportation. Retirees generally spend more on housing and medical care, and less on transportation compared to persons of working age. So, from the perspective of retired workers, the CPI-W puts too little emphasis on housing and medical care, and too much emphasis on transportation.

So what? Housing and medical care costs have increased more quickly than the overall CPI-W in 2025, while transportation costs have risen more slowly.

Detailed are the year-to-date increases (through August) in the overall CPI-W and the three individual spending categories I just mentioned:

• Overall inflation: 2.5%
• Housing inflation: 3.9%
• Medical care inflation: 3%
• Transportation inflation: 0.2%

To summarize, prices are increasing more quickly than overall inflation in the spending categories that are underweight from the perspective of retirees, and prices are increasing more slowly than overall inflation in a spending category that is overweight from the perspective of retirees.

That means the CPI-W is likely underestimating the true inflationary pressure that retired workers face, which means Social Security's 2026 COLA will be too small. In that scenario, the increase in benefits next year would not fully offset rising prices across the economy for retirees, meaning Social Security payments would lose purchasing power as they fell behind inflation.

Similar events unfolded in 2023 and 2024, leading to COLAs that were too small in 2024 and 2025. Indeed, most retired workers surveyed by The Motley Fool found the COLAs in those years to be insufficient. And history is likely to repeat itself in 2026. That's bad news for retirees.

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