Here's the Best-Case Scenario for the 2026 Cost-of-Living Adjustment (COLA), According to the Social Security Board of Trustees

Key Points

• The Social Security Administration is expected to announce the 2026 COLA in October.

• If inflation stays stubbornly high this month, you could see a larger raise next year.

• However, the best-case scenario may differ from what you expect.

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

The Social Security cost-of-living adjustment (COLA) is an annual increase in benefits that aims to help monthly checks maintain their buying power over time.

The official announcement for the 2026 COLA will likely come in mid-October, after the Social Security Administration finishes analyzing third-quarter inflation data. But in the meantime, there are already some estimates for where next year's adjustment might land -- and there's good and not-so-good news.

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How the COLA is calculated

Most people don't need to know all the nitty-gritty details of how the COLA is determined, but it can be helpful to have at least a basic understanding of where the numbers come from.

The COLA is based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is released monthly by the Bureau of Labor Statistics, and it tracks changes in prices for common goods and services -- effectively measuring inflation rates over time.

The Social Security Administration takes an average of the CPI-W values for July, August, and September, then compares that figure to one from the same time period the year before. If the current year's average is higher, the percentage difference will be next year's COLA.

Again, we won't know the official COLA for 2026 until after September's CPI-W report is released in October. But the Social Security Administration already has a best-case scenario for what it could be.

The best-case scenario for 2026

Each year, the Social Security Administration Board of Trustees releases a report detailing the state of the program, which includes projections on where future COLAs might land, depending on various factors affecting the program's revenue sources.

According to the report, the best-case scenario for 2026 would be a COLA of 3%. That would assume that inflation is on the higher side, allowing the program to collect more in revenue as wages increase. The average retired worker collects around $2,000 per month in benefits, as of July 2025, and a 3% COLA would amount to roughly $60 per month.

Unless inflation surges significantly in September, it's unlikely we'll actually see a 3% COLA next year. The most recent COLA prediction for 2026 is 2.7%, according to mid-August data from nonpartisan advocacy group The Senior Citizens League.

That said, inflation has been spiking in recent months, and the COLA prediction has been steadily increasing throughout the year.

Data source: The Senior Citizens League. Table by author.

Here's the kicker, though: While a higher COLA may seem like the best-case scenario for those receiving Social Security, it's not as helpful as it might appear.

A higher COLA means inflation is increasing. While that annual raise can help make ends meet, higher costs overall will generally have a bigger impact on Americans' budgets than an extra $50 or $60 per month in benefits from the COLA.

Tariff uncertainty could also exacerbate the issue. The COLA is only based on inflation data from three months out of the year, but it affects beneficiaries all year long. If the Social Security Administration announces the COLA in October and then sweeping new tariffs take effect early next year, the COLA may not be near high enough to combat the costs Americans actually face in 2026.

The other big problem plaguing Social Security

Economic policies aside, the COLA doesn't have a great history of keeping up with rising costs anyway. Between 2010 and 2024, Social Security benefits lost a whopping 20% of their buying power, a report from The Senior Citizens League found.

The report also revealed that even substantially higher-than-average COLAs have struggled to combat inflation. In 2022, for example, beneficiaries saw a staggering 5.9% adjustment -- which, at the time, was the highest since the 1980s. Yet the inflation rate for that year was 7%.

This doesn't necessarily mean that retirees shouldn't look forward to a larger COLA. Higher adjustments can still go a long way toward paying the bills, especially when many families are stretched thin financially right now. But it may be wise to keep your expectations in check regarding what a higher COLA actually means, and how far it will realistically go in 2026 and beyond.

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