Social Security COLA Projection Holds at 2.7%
The Social Security cost-of-living adjustment (COLA) forecast for 2026 stayed the course at 2.7%, according to today’s analysis by The Senior Citizens League (TSCL).
The adjustment would raise the average monthly benefit for retired workers by $54, from $2,008 to $2,062. It would be slightly higher compared to last year’s adjustment of 2.5% but a steep drop from 2024’s 3.2%. Over the past 20 years, the COLA has averaged 2.6%.
“Seniors across America are holding their breath as we wait for the official COLA announcement in October,” said TSCL Executive Director Shannon Benton. “Our research shows that about 39% of seniors depend on their benefits for all their income, so the COLA announcement has a direct effect on their quality of life.”
Independent Social Security and Medicare Policy Analyst Mary Johnson, who releases her COLA projection every month, estimates the final adjustment will come in at 2.8%. Johnson notes that this percentage could be lower if not for daily inflation in September. “Current month to month data trends strongly suggest otherwise, and based on data going back 25 years, there’s an 88% chance that inflation will push the COLA to 2.8% with the September data,” Johnson estimates. In contrast, there’s a 12% chance the figure could fall to 2.6%, she adds.
It’s an observation that Benton noted as well. TSCL predicted a COLA of 2.1% in January 2025, prior to concerns over aggressive tariff impacts and hard-hitting inflation. “Many seniors believe inflation is much higher than the COLA estimates. For example, TSCL estimates that about 80% of seniors believed inflation in 2024 was substantially higher than the 2.5% COLA implemented to make up for it at the beginning of 2025,” stated Benton.
Johnson’s estimate would increase the average monthly retiree benefit of roughly $1,955 by nearly $54.70 to $2,009.70 per month. “That’s apt to look pretty underwhelming to most Social Security recipients,” Johnson says.
Just one more month remains until the official COLA projection for next year is announced, set to drop on Oct. 15. The Social Security Administration (SSA) calculates the annual adjustment by using the Consumer Price Index of the Urban Wage Earners and Clerical Workers’ (CPI-W) third quarter data found in July, August, and September. This data is then averaged and compared to last year’s third quarter numbers. The percentage of difference is what the SSA uses for the annual COLA adjustment.
Medicare costs could swallow COLA
Johnson notes that much of the increase could be buried under Medicare premiums in 2026. Health policy experts anticipate Part B benefits, which are automatically deducted from Social Security benefits, and Part D prescription drug plans, to climb in the next year.
The Social Security and Medicare Trustees Reports in June estimated that the standard monthly Part B premium would increase $21.50 from $185 to $206.50 in 2026—nearly breaking the record for the highest premium jump of $21.60 in 2022. We don’t know the final amount yet and it could set a record that no Medicare beneficiary wants to see,” Johnson says.
Medicare Part B premiums will likely be announced apart from the COLA and tend to be announced in or around November.
The Trump Administration’s decision to continue implementing a temporary Part D premium stabilization program, but with reduced support for prescription drug plan sponsors, could mean increases in Part B premiums for enrollees.
Now, plans will be allowed to increase monthly premiums to as much as $50 per month, up from $35 in 2025.
“It’s very important to watch for notifications of changes in Part D premiums and out of pocket costs,” Johnson says. “Be ready to compare drug and health plan coverage during Medicare Open Enrollment that starts October 15.”
SSA to end paper checks
The SSA’s recent announcement to stop mailing paper checks will likely impact beneficiaries unaware of the incoming change, TSCL added in their analysis. The administration will break from mailing checks on Sept. 30, thus impacting nearly 400,000 beneficiaries who still receive paper checks.
While the Treasury Department has published instructions on helping beneficiaries set up bank accounts that could accept electronic deposits, TSCL questions whether the outreach has been successful. “While TSCL supports the administration’s motives for eliminating paper Social Security checks… we’ll be watching when it comes to implementation: How effective will it be at communicating this change, so affected seniors won’t have their benefits interrupted?” Benton adds.
CPI continues rising
The Bureau of Labor Statistics (BLS) announced that its Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in August, after rising 0.2% in July. Of the last 12 months, all items indexed grew 2.9%.
According to the BLS, in August, the index for shelter rose 0.4%, the food index grew 0.5%, the index for energy increased 0.7%, and the index for gasoline grew 1.9%.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
