Social Security COLA prediction: Bad news for retirees in 2026?
An early prediction for next year’s Social Security Cost of Living Adjustment shows retirees could be in for a shock.
The nonpartisan advocacy group The Senior Citizens League predicts the 2026 COLA will be 2.1%, based on data from the Bureau of Labor Statistics’ CPI-W, the index used to calculate the annual increase. December’s CPI-W came in at 2.8%.
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The latest prediction reflects cooling inflation that could lead to the lowest COLA since the start of the COVID-19 pandemic. 2025’s COLA was 2.5% down from 3.2% in 2024 and a steep drop from the 8.7% beneficiaries received in 2023. The last time COLA came in below 2.0% was in 2021, when it was 1.3%.
TSCL Executive Director Shannon Benton said the predictions – albeit premature – indicate a serious problem for senior citizens.
“Inflation slowing down doesn’t mean that seniors are catching up. It’s essential that Congress acts quickly to fix years of sub-par COLAs and help give seniors the quality of life they deserve,” Benton said. “The Trump Administration’s plan to eliminate taxes on Social Security benefits would make a massive difference. The current thresholds used to determine if you’ll pay taxes on your benefits were set up back in the 1980s, and we’ve never adjusted them for inflation.”
According to TSCL survey data, 67% of seniors depend on Social Security for more than half their income and, while slowing inflation is good, it doesn’t mean prices will fall but rather they will grow at a slower pace.
“This leaves many seniors facing a budget shortfall. According to data from TSCL’s 2024 Senior Survey, 62 percent of older Americans worry that their retirement income won’t even cover essentials like groceries and medical bills,” TSCL said.
COLAs, designed to prevent benefits from being eroded by inflation, are determined by data from the Consumer Price Index for Urban Wage Earners and Clerical Workers which tracks the average price of a basket of goods. The average CPI-W for the third quarter – July, August and September – of the previous year is compared to the same period of the current year with the difference resulting in the COLA.