Social Security's 2026 Cost-of-Living Adjustment May Surprise Retirees

Many older Americans today would not be able to get by without Social Security. The Federal Reserve puts median retirement savings among 65- to 74-year-olds at just $200,000 as of 2022.

That's not a lot of money to spread out over what could be 20 years of retirement or more. So naturally, people without much savings commonly end up falling back on Social Security to cover the bulk of their bills.

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But seniors in that boat may be having a tough time keeping up this year. Inflation has not cooled much in 2025. If anything, it's increased slightly from when Social Security's 2025 cost-of-living adjustment (COLA) was announced.

Seniors learned back in October that their Social Security benefits would rise by 2.5% in 2025. Many weren't happy with that news, and understandably so, since 2025's COLA marks the smallest increase in years.

Now, there's an estimate for 2026's Social Security COLA on the table. And the number may come as a surprise.

The COLA seniors may be looking at for 2026

The purpose of Social Security COLAs is to make sure that seniors can keep up with their costs as inflation drives prices upward. COLAs are based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

When the CPI-W rises from one year to the next, Social Security benefits increase. But because COLAs are based specifically on third-quarter CPI-W data, it's too early in the year to determine next year's Social Security increase with certainty. Any number that exists right now is merely an estimate.

That said, the latest estimate comes courtesy of the non-partisan Senior Citizens League, which says that next year's COLA could be 2.2%. Given that inflation is still wreaking havoc on consumers of all ages, that might seem like a surprisingly low number. But the news is not all bad.

Why Social Security recipients may be in for relief in 2026

A lot of people who live mostly on Social Security right now are having a hard time keeping up with their expenses. And it might seem like a stingy 2.2% COLA won't help matters in 2026.

But actually, a 2.2% COLA could end up being positive news for one key reason. For next year's COLA to be that small, inflation would need to be modest.

In other words, if inflation levels continue to pick up in 2025, next year's Social Security COLA won't be 2.2% -- it will be higher. If that initial estimate ends up being correct, it will signify a slowdown in inflation -- and relief from rising prices. That, frankly, could do retirees a lot more good than a more generous COLA.

It's best to have a backup plan

Clearly, we won't know for a while what 2026's Social Security COLA amounts to. But seniors who are worried about their ability to make ends meet should take steps to better their finances now.

That could mean returning to work in some capacity while the economy is still in good shape. It's hard to know what the coming months have in store, so now may be the time to pick up shifts at a local retailer or look into gig work.

Even if 2026's Social Security COLA ends up being much higher than 2.2%, it will come at the cost of rising inflation. Retirees who get most of their income from Social Security need to prepare for that to avoid struggling in the new year.

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