We Received a Big Clue About Social Security's 2026 Cost-of-Living Adjustment (COLA) That May Put a Smile on the Faces of Beneficiaries

The most-anticipated day of the year for Social Security's more than 70 million traditional beneficiaries has finally arrived. In mere hours, at 08:30 a.m., ET, on Oct. 24, the U.S. Bureau of Labor Statistics (BLS) will publish the delayed inflation data from September and provide the last puzzle piece necessary to calculate Social Security's cost-of-living adjustment (COLA) for the upcoming year.

In each of the last 24 years, national pollster Gallup has surveyed retirees to gauge how important Social Security income is to their financial well-being. In every survey, between 80% and 90% of respondents noted it was a necessity, to some degree, to make ends meet. Knowing how much of a "raise" aged beneficiaries can expect in 2026 is of great importance.

Though this answer will be known, with certainty, later today, existing inflation data may have already offered a really big clue of what to expect with Social Security's 2026 COLA -- and it might be enough to put a smile on the faces of beneficiaries.

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Social Security COLA estimates are calling for history to be made

Social Security's cost-of-living adjustment is the near-annual payout boost beneficiaries receive for the upcoming year that accounts for the inflationary pressures they've contended with. In other words, if the price for a large basket of goods and services regularly purchased by beneficiaries rises by 3% from one year to the next, Social Security checks would need to climb by a commensurate amount to avoid a loss of buying power. This raise is Social Security's COLA.

Inflation is a common occurrence, with prices rising on a year-over-year basis during the third quarter (July through September) -- the period used to calculate Social Security's COLA -- in 47 out of the last 50 years. With the exception of 2010, 2011, and 2016, beneficiaries have always received a raise.

Following the release of the August inflation report in mid-September, nonpartisan senior advocacy group The Senior Citizens League (TSCL) locked in its prognostication of a 2.7% COLA for the new year. This guess has risen pretty steadily from the 2.1% payout boost TSCL had forecast in mid-January for 2026.

The other prominent independent forecast comes from policy analyst Mary Johnson, who's calling for a 2.8% boost to Social Security income in the upcoming year. Her forecast ticked up by 0.1% after the release of the August inflation data.

If either of these forecasts proved accurate, it would represent the fifth consecutive year where Social Security's COLAs reached or surpassed 2.5%. This would mark the first time in 29 years that beneficiaries received at least a 2.5% raise for five straight years (COLAs clocked in between 2.6% and 5.4% from 1988 through 1997).

Based on TSCL's and Johnson's forecasts, the average retired-worker beneficiary can expect their monthly check to climb $54 to $56, while the typical worker with disabilities and survivor beneficiary would see their monthly payouts rise by $43 to $44 each, respectively.

This inflation data may have spilled the beans on Social Security's 2026 cost-of-living adjustment

Although the precise answer retired workers, workers with disabilities, and survivor beneficiaries are awaiting is just hours away, inflation data that was released over a month ago may hold a big clue about Social Security's 2026 COLA.

Meanwhile inflation is broadening. Here's percent of items that had at least a 3 percent (annualized) price increase over the last month, something Waller used to flag the 2023 disinflation.

I brushed this off and am surprised at its increase. ~60% for both core and overall. /3 pic.twitter.com/oSqE3iCDal

-- Mike Konczal (@mtkonczal) September 11, 2025

The post on X (formerly Twitter) that you see above comes courtesy of Mike Konczal, the Senior Director of Policy and Research at the Economic Security Project, and the former Chief Economist of the National Economic Council during Joe Biden's presidency.

While there's been a discernable uptick noted in the prevailing rate of inflation in recent months as President Donald Trump's tariff and trade policy has taken effect, what's been masked is a broadening of the categories experiencing a higher trailing-12-month (TTM) inflation rate.

Based on the August inflation data published by the BLS and put together by Konczal, 59% of 140 Consumer Price Index (CPI) items, including 82 core CPI items, were higher on a TTM basis by at least 3%. Core inflation excludes potentially volatile cost components like food and energy to offer a more encompassing look at the long-term price trend.

The last time we observed 59% or more of these 140 CPI items rise by at least 3% on a consistent basis was August 2021 through August 2022. As a reminder, the prevailing rate of inflation during this period rocketed from around 5% to a peak of 9.1% during the summer of 2022. While this data doesn't guarantee we'll witness anywhere near the same spike in the U.S. inflation rate as we observed from August 2021 to August 2022, it does portend a continued move higher in the prevailing rate of inflation.

Konczal's analysis would suggest that TSCL's and possibly even Johnson's 2026 COLA forecast are conservative given the broadening inflation trends signaled by BLS data. In other words, don't be surprised if Social Security's 2026 cost-of-living adjustment announcement surpasses these independent estimates and clocks in at 2.9% when it's announced in a few hours.

Image source: Getty Images.

Social Security COLAs have a history of coming up short for retirees

While a higher-than-projected raise for the upcoming year would likely put smiles on the faces of beneficiaries, Social Security COLAs, more often than not, have a history of coming up short for retirees.

In theory, the program's inflation-measuring tool, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), should be accurately accounting for the inflationary pressures that aged beneficiaries are dealing with. However, the full name of this index gives away its flaw.

The CPI-W tracks the pricing pressures faced by "urban wage earners and clerical workers," who in most cases aren't aged 62 and above and/or aren't currently receiving a monthly Social Security payout. This is a problem when 87% of Social Security beneficiaries are 62 and above, as of December 2024.

Retirees and urban wage earners/clerical workers spend their money differently. Specifically, seniors devote a higher percentage of their monthly budget to shelter and medical care services than urban wage earners and clerical workers. Aside from the CPI-W not factoring this added importance for retirees into the COLA calculation, the TTM inflation rate for shelter and medical care services remains higher than next year's projected COLA.

The other issue is for dual enrollees -- persons receiving a Social Security benefit who are enrolled in traditional Medicare. The 2025 Medicare Trustees Report is estimating an 11.5% increase to Part B next year, which would boost the base premium from $185/month in 2025 to $206.20/month. There's a good chance dual enrollees will see most or all or their 2026 COLA gobbled up by a considerably higher Part B premium in 2026.

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