Social Security 2026 COLA Forecast: Retirees should brace for bad news
The 2026 Social Security cost-of-living adjustment (COLA) is already generating headlines—and early predictions suggest a far more modest increase than the 3.2% bump retirees received in 2025.
With inflation cooling and the Federal Reserve keeping rates high, economists and benefits analysts warn that the next COLA could fall below 2%.
A Smaller COLA Is on the Horizon
The nonpartisan Senior Citizens League, which closely monitors benefit trends, estimates the 2026 COLA will be just 2.57% based on recent Consumer Price Index (CPI-W) data. That would mark a significant step down from the robust increases seen in recent years:
- 2022 COLA: 5.9%
- 2023 COLA: 8.7% (record high due to post-pandemic inflation)
- 2024 COLA: 3.2%
- 2025 COLA: Estimated at 3.2%
- 2026 COLA (forecast): 2.57% or possibly lower
If this projection holds, the average monthly Social Security benefit—currently around $1,907—would increase by about $49 starting in January 2026.
“I’m pretty confident that the 2026 COLA will be modest,” said Motley Fool analyst Christy Bieber. “Inflation is slowing, which is good for the economy—but it does mean smaller Social Security increases.”
Why the 2026 COLA Might Be Lower
Several factors are contributing to the outlook for a smaller adjustment:
- Easing Inflation: The CPI-W, the index used to calculate the annual COLA, has shown smaller year-over-year increases in recent months.
- Fed Policy: The Federal Reserve’s commitment to keeping interest rates higher for longer is designed to cool inflation—and it’s working.
- Benefit Math: COLA is calculated using Q3 (July–September) data, so unless inflation surges this summer, the numbers will remain muted.
What a Smaller COLA Means for Seniors
A lower COLA could have a real impact on seniors living on fixed incomes—especially those facing rising out-of-pocket medical costs, housing, and food prices. While inflation has stabilized overall, certain essentials haven’t dropped in price:
- Prescription drugs and insurance premiums continue to climb
- Rents remain near record highs in many cities
- Utility costs have rebounded in 2025 after dipping slightly
For many retirees, the COLA is the only financial buffer against these rising expenses.
Can the Forecast Change?
Yes. The final COLA won’t be announced until October 2025, when the Social Security Administration publishes CPI-W data for the third quarter. If inflation unexpectedly spikes due to oil prices, global unrest, or policy changes, the COLA could rise.
How to Prepare for a Smaller COLA
Seniors and those nearing retirement can take steps now to brace for a lighter 2026 COLA:
- Re-evaluate budgets: Trim discretionary spending and consider fixed-cost alternatives.
- Check for state benefits: Some states offer property tax relief, utility subsidies, or food assistance.
- Review Medicare Advantage plans: Open enrollment in fall 2025 may offer more affordable options.
- Monitor inflation trends: Stay informed through trusted sources like SSA.gov and inflation trackers.
COLA 2026: Bottom Line
A COLA under 3% may disappoint retirees, especially after back-to-back larger increases. But in a slowing economy with tempered inflation, it’s a sign that price pressures are easing.
Seniors should prepare now for a smaller 2026 bump—and look to stretch every dollar further.
Stay informed and plan ahead. Social Security remains a lifeline for over 71 million Americans — knowing your payment dates and any upcoming changes is key to staying financially secure.
If you’re unsure about your benefits or need personalized guidance, visit SSA.gov or call 1-800-772-1213.