Social Security cost-of-living adjustment may be higher in 2026: estimates

Millions of Social Security beneficiaries may see a 2.7% to 2.8% increase to their monthly checks in 2026, according to new estimates based on the latest government inflation data.

A 2.8% Social Security cost-of-living adjustment may go into effect next year, estimates Mary Johnson, an independent Social Security and Medicare policy analyst. That increase would push the average retirement benefit up by about $54.70 per month, she said.

Separately, the Senior Citizens League estimates the 2026 COLA may be 2.7%, pushing the average monthly retirement benefit up $54 per month, according to the nonpartisan senior group.

The average monthly retirement benefit is $1,955 for retired workers and their families, including spouses and children, according to August Social Security Administration data.

Those estimated increases would be up from the 2.5% boost to benefits that went into effect in 2025. The COLA has averaged 2.6% over the past 20 years, according to the Senior Citizens League.

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The COLA projections are based on new consumer price index data for the month of August that was released Thursday.

The official Social Security cost-of-living adjustment will include one more month of inflation data.

The COLA for the next year is typically announced by the Social Security Administration in October. It is calculated based on third-quarter data using a subset of the consumer price index, known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

There is a very high chance that the Social Security COLA will be 2.8% once September data is included, according to Johnson. In order for the COLA to land at 2.7%, there would have to be “virtually no inflation growth at all in September,” she said.

While new estimates point to a higher COLA than this year’s 2.5% boost to benefits, the projections are lower than some increases Social Security beneficiaries have seen in recent years. That includes a 3.2% cost-of-living adjustment for 2024, as well as record-high increases Social Security beneficiaries saw in 2022 and 2023, when the annual COLAs were 5.9% and 8.7%, respectively.

Those record increases came as inflation jumped following the onset of the Covid pandemic.

Retirees worry a similar shock could prompt the rate of inflation to spike again.

Half of retirees surveyed say they are “terrified” about the potential impact tariffs may have on their retirement income or retirement savings, according to an August Nationwide Retirement Institute poll.

Around two-thirds of individuals who receive Social Security benefits think at least somewhat that tariffs will prompt inflation beyond what annual cost-of-living adjustments can cover, Nationwide found.

More than half of current Social Security beneficiaries in the survey said they have already had to reduce their discretionary spending as increases to their expenses have outpaced the growth of their benefits.

If a retiree sees a $54 cost-of-living increase to their monthly Social Security checks but other essential expenses like rent go up, the inflation adjustment doesn’t go as far, said Tina Ambrozy, head of strategic customer solutions at Nationwide.

Medicare costs are also poised to increase next year. The standard monthly Part B premium may go up $21.50 per month, to $206.50 per month from $185, according to Medicare trustees estimates. That would be “very close” to the highest premium jump in the program’s history, which was $21.60 per month in 2022, according to Johnson.

Medicare Part D premiums for prescription drug plans may increase by as much as $50 per month in 2026, Johnson said.

While the pace of inflation has come down from the 2021 and 2022 pandemic highs, seniors are still seeing higher prices on grocery store shelves and elsewhere.

Retirees are “particularly sensitive to inflation,” said Jean-Pierre Aubry, associate director of retirement plans and finance at the Center for Retirement Research at Boston College — though how it affects them individually depends on their personal circumstances.

For those who rely on fixed income investments like bonds, inflation can be “quite painful” if the returns and coupon payments do not keep pace with a rising cost of living, Aubry said.

However, for seniors who still have mortgage debt, inflation can help by making the real value of those outstanding balances go down, he said.

Notably, because Social Security cost-of-living adjustments are put into effect once a year, those increases may come after inflation has already risen.

If retirees can smooth out their spending by trying to avoid sharp ups and downs in their outlays, that lag can be less of an issue, Aubry said.

While 74% of respondents to Nationwide’s survey said they think they can manage Social Security benefits on their own, just one-third are confident in their knowledge of the program.

Working with a financial advisor can help retirees address those knowledge gaps and better manage their benefits and other assets, Ambrozy said.