Social Security's 2026 Cost-of-Living Adjustment (COLA) Announcement Is Tomorrow (Oct. 24), and It's Primed for Disappointment

The most important Social Security announcement of the year is literally right around the corner.

Tomorrow, Oct. 24, at 08:30 a.m., ET, the U.S. Bureau of Labor Statistics (BLS) will file the September inflation report, which contains the last piece of data needed to calculate Social Security's 2026 cost-of-living adjustment (COLA).

Normally, the program's more than 70 million traditional beneficiaries would have already known if their monthly payout was rising in 2026, and by how much. But due to the government shutdown, economic data reporting has been delayed across the board. Some furloughed BLS workers were brought back in to ensure the Social Security Administration (SSA) had the necessary inflation data to report the COLA this month (albeit nine days later than initially scheduled).

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While an announcement of beefier payouts in the upcoming year is something Social Security beneficiaries typically look forward to, they might not like what they're about to hear.

Social Security COLAs play an important role in combating inflation

The annual cost-of-living adjustment that you've been hearing so much about recently is the mechanism relied on by the SSA to help combat the effects of inflation.

The prices for the goods and services we buy aren't static. Over time, most goods and services will increase in price. If Social Security benefits don't also increase to match the effects of rising prices over time, recipients will see their buying power dwindle.

Inflation is a pretty normal occurrence for the U.S. economy, which means Social Security beneficiaries have become accustomed to receiving annual raises. Ever since the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) became the program's tool for measuring inflation 50 years ago, only three years have passed where deflation occurred and no COLA was passed along (2010, 2011, and 2016).

The holdup for this year's COLA has everything to do with the release of the September inflation report. Although the CPI-W is based on trailing-12-month inflation data and is reported monthly by the BLS, only end readings from the third quarter, July through September, factor into the COLA calculation.

If the average CPI-W reading from the third quarter of 2025 is higher than the comparable reading from the third quarter of 2024, inflation has taken place and Social Security checks will climb in the new year.

A higher prevailing rate of inflation is providing a lift to Social Security COLAs. US Inflation Rate data by YCharts.

We haven't witnessed this happen since 1997

Following the release of the August inflation report from the BLS, independent estimates for the 2026 COLA were narrowed down.

Nonpartisan senior advocacy group The Senior Citizens League (TSCL) kept its projection unchanged from the prior month at 2.7%. It's worth noting that this expectation is up from a forecasted cost-of-living adjustment for 2026 of 2.1% back in mid-January.

Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson increased her forecast for Social Security's 2026 COLA by a tenth of a percent from the prior month to 2.8%.

If these forecasts from TSCL and Johnson are in range of what's to be announced tomorrow (Oct. 24), it would lead to an average monthly benefit increase for retired workers of $54 to $56 in the new year. As for the average worker with disabilities and survivor beneficiary, their monthly check would be expected to climb by approximately $43 to $44 each, respectively.

Although these nominal-dollar projections aren't going to break any records, there's a really high probability of Social Security's COLA making history on a percentage basis. While a 2.7% or 2.8% raise might sound pedestrian, it would mark the fifth consecutive year that beneficiaries have seen their payouts climb by at least 2.5%. It follows respective increases of 5.9%, 8.7%, 3.2%, and 2.5% from 2022 through 2025.

The last time we witnessed five consecutive cost-of-living adjustments that met or surpassed 2.5% was from 1988 through 1997.

Unfortunately, this bit of history almost certainly won't be enough to protect retirees from a loss of purchasing power in 2026.

Image source: Getty Images.

Disappointment awaits many of Social Security's aged beneficiaries in the new year

Though Social Security provides a financial foundation for workers with disabilities and survivors of deceased workers, it's the program's aging workers that it was originally designed to protect. Based on nearly a quarter century of annual surveys from Gallup, between 80% and 90% of retirees rely on their Social Security income, in some capacity, to make ends meet.

While the expectation is that annual cost-of-living adjustments will match the prevailing rate of inflation, more often than not this isn't the case. Social Security's annual COLAs typically come up short, relative to the inflationary pressures aged beneficiaries are actually contending with.

One of the more glaring problems with annual COLAs is the inflationary index responsible for their calculation, the CPI-W. This is an index that tracks the pricing pressures faced by "urban wage earners and clerical workers," who in most instances aren't aged 62 and above and/or currently receiving a Social Security benefit.

Compared to a typical worker, retirees spend a disproportionately higher percentage of their budget on shelter and medical care services. The trailing-12-month (TTM) inflation rate for these two important expenses has been consistently higher than the COLAs passed along to beneficiaries. The end result is a loss of purchasing power for Social Security income over time.

Based on the TTM inflation rate ended in August 2025 for shelter and medical care services of 3.6% and 4.2%, respectively, per the Consumer Price Index for All Urban Consumers (a similar inflationary index to the CPI-W), a 2.7% or 2.8% bump in 2026 isn't going to cut it.

The unwanted icing on the cake for select retirees is the projected double-digit percentage hike in Medicare's Part B premium next year. Part B is the portion of Medicare responsible for outpatient services.

People receiving a Social Security benefit who are also enrolled in traditional Medicare almost always have their Part B premium automatically deducted from their monthly payout. If this premium rises by 11.5% to $206.20/month, as the 2025 Medicare Trustees Report predicted in mid-June, a significant number of retired-worker beneficiaries are going to see their COLAs partially or fully offset.

This much-anticipated announcement is primed for disappointment.

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