Yes, it’s admittedly way too early to accurately predict what the Social Security cost of living adjustment (COLA) for 2026 will be. But based on the latest Bureau of Labor Statistics data, The Senior Citizens League released its initial prediction this week that the 2026 COLA will mirror the 2025 COLA raise by staying at 2.5%.
“This figure would be equal to 2025’s COLA, signaling modest inflation in the year to come,” TSCL said in a press release, adding that the TSCL COLA model expects inflation to remain relatively low in 2025, yielding a similar COLA to this year’s 2.5%. The organization will update its prediction every month until the Social Security Administration announces the official 2026 COLA in October 2025.
“While it’s great to see inflation cooling, that doesn’t mean seniors’ economic challenges are over. Years of inadequate COLAs have left older Americans behind, and TSCL will continue fighting until Social Security offers a guaranteed minimum COLA of 3%,” said TSCL Executive Director Shannon Benton. “If the Trump administration wants a quick win with seniors, the best place to start is not just protecting Social Security but reforming it. Seniors want to see stronger COLAs that better represent their experience of inflation. They also demand financial reforms to ensure the program lasts not just through the end of their retirements, but their grandchildren’s.”
The Consumer Price Index for Urban Wage Earners (CPI-W), the government’s inflation index to calculate COLAs, came in at 2.6% for November, the second month of Q4. Wednesday’s release continues a recent trend of falling inflation, as the CPI-W averaged 3.2% yearly inflation in Q1 and Q2 2024 before falling to an average of 2.5% in Q3, the quarter used to calculate Social Security COLAs.
While the incoming Trump Administration made combatting inflation a central part of its campaign, TSCL noted the fight may already be nearing its end. After reaching a peak of 9.3% in Q2 of 2022, inflation, as measured by the CPI-W, has steadily declined. If the CPI-W does not increase dramatically this month, Q3 and Q4 2024 will be the first consecutive quarters since the start of 2021 with inflation below 3%.
Seniors express concern
In a TSCL survey of 3,249 American seniors conducted this fall, 69% of respondents said they worry persistent high prices from inflation will drive up their spending and cause them to deplete their retirement savings and other assets.
Seniors are also worried about benefit cuts. In the same survey (which had similar percentages of Democrat-leaning, Republican-leaning, and independent voters), 74% of seniors worried that Congress or the President would enact new laws or rules that cut their Social Security benefits. Nearly as many, 70%, worried about cuts to Medicare benefits.
When asked what the federal government should prioritize when addressing Social Security’s finances over the next two years, 81% agreed that Congress should increase taxes to address Social Security’s finances. The proposal they were most likely to support was raising or eliminating the limit on income subject to Social Security’s payroll tax ($176,100 in 2025).
Johnson warns COLA could shrink in 2026
Mary Johnson, an independent Social Security and Medicare policy analyst, pointed out in an email this week that Social Security beneficiaries are receiving a COLA of 2.5% effective with the check received in January, which is expected to average roughly $49 per month more for retirees. She also noted the new consumer price data released Wednesday showing inflation as measured by the CPI-W holding steady at 2.6%.
But she warned that there may not be much of that 2025 2.5% COLA boost left over after deductions for Medicare premiums, and any tax withholdings. “While most retirees may be thinking this COLA is pretty meager, it may really be the highest we see for awhile,” Johnson said. “Longer-term consumer price trends suggest that our COLA could be a lot more puny, if we get any COLA at all, in 2026.”
According to Johnson’s projections through third quarter 2025, the COLA for 2026 could drop below 1%, but this forecast will change with consumer price data in coming months. Johnson’s consumer price models show that if current trends continue, inflation by the third quarter of 2025 could be at its lowest in almost a decade.
SEE ALSO:
• It’s Official: 2025 Social Security COLA Set at 2.5%
• Medicare Premiums Growing Twice as Fast as Social Security COLA
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
