According to newly updated March forecasts from both The Senior Citizens League and retired Social Security and Medicare analyst Mary Johnson, Americans Social Security beneficiaries are on track for a 2.2% cost-of-living adjustment (COLA) for 2026.
The U.S. Bureau of Labor Statistics reported this morning that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)—from which the next year’s COLA is determined—increased 2.7% percent over the last 12 months, down from 3.0% last month.
TSCL’s updated prediction of a 2.2% COLA is 0.3 percentage points lower than the official 2025 COLA of 2.5%, and it marks a modest decrease from its previous forecast which stood at 2.3% in February.
It’s important to remember that these forecasts are preliminary and subject to change, as the official COLA is determined by the Social Security Administration (SSA) each October, based on final third-quarter CPI-W data. The actual COLA for 2026 will depend on inflation trends throughout 2025, and the Social Security Administration is expected to officially announce it by Oct. 15, 2025.
Johnson bumps estimate up slightly
Longtime COLA forecaster Mary Johnson also updated her 2026 forecast today.
“My long-range estimate of the 2026 COLA based on latest CPI-W data is now 2.2%, about 0.1% higher than I forecast last month,” Johnson said. “But the year-over-year rate of inflation in February for the CPI-W is now up to 2.7% meaning our 2.5% COLA that we received for 2025 is falling behind real inflation.”
Johnson noted that in fact, the average rate of inflation over the past 12 months has come down based on published CPI data. “I suspect this may result in another yoyo up day on Wall St. until tariff uncertainty pulls the rug out tomorrow,” she said. “As far as our COLA goes, Social Security recipients are falling behind. But the uncertainty around Social Security is getting far worse.”
Based on recent events, Johnson added that she is no longer forecasting the lowest inflation in more than a decade.
There is growing concern that President Trump’s recent escalation of tariffs could exert upward pressure on inflation.These tariffs, targeting goods from Canada, Mexico, and China, are expected to increase manufacturing costs, potentially leading to higher consumer prices.
While inflation had been on a downward trend, recent policy developments, particularly the implementation of new tariffs, have introduced factors that may contribute to a resurgence in inflationary pressures in 2025.
Clawbacks coming
In its release today, TSCL also noted that the Trump administration announced a new policy to ratchet up SSA’s efforts to collect overpaid Social Security benefits. Starting on March 27, seniors receiving accidental overpayments will have 100% of their future benefits withheld until they’ve paid back all taxpayer money. This rule, which reverses a Biden-era policy that withheld the greater of 10% or $10, will only take effect on overpayments that occur after March 27th.
According to its Agency Financial Reports, the SSA collected an average of $4.2 billion in overpayments per year from fiscal years 2017 to 2023. Meanwhile, it ran an average balance of $22.8 billion in uncollected overpayments during the same period.
“It is our duty to revise the overpayment repayment policy back to full withholding, as it was during the Obama administration and first Trump administration, to properly safeguard taxpayer funds,” said Lee Dudek, Acting Commissioner of Social Security, in a press release issued March 7.
TSCL Executive Director Shannon Benton said the government should consider giving seniors more time to return overpaid benefits before it starts withholding Social Security checks. Social Security beneficiaries currently have 30 days from being notified of being overpaid to return the funds before the government begins withholding benefits. The Social Security Overpayment Act, which TSCL noted was introduced in the previous Congress but failed to pass, would extend this window to 120 days and provide valuable relief for seniors.
“While The Senior Citizen’s League (TSCL) believes overpayments on Social Security benefits should be recouped, we feel it’s important that beneficiaries not face undue pressure from an immediate 100% reduction in benefits,” Benton said.
EDITOR’S NOTE: This article has been updated as of March 12 to reflect the latest Social Security COLA forecasts. Previous coverage appears below.
FEB. 12, 2025-Projections for Social Security’s COLA increased slightly for February, The Senior Citizens League (TSCL) reported Wednesday morning. Despite the increase, the projection is considerably lower than the agency’s initial forecast in December.
The Senior Citizen’s League projects the 2026 Social Security COLA to come in at 2.3%, a modest decrease from its 2.5% estimate in December but still marginally higher than the 2.1% predicted last month.
The figure is lower than the 3.0% yearly change in the CPI-W—the index used to calculate the COLA— announced by the Bureau of Labor Statistics (BLS) on Wednesday morning.
Each month, TSCL issues a new prediction of the next Social Security COLA using its statistical model. The model incorporates the Consumer Price Index (CPI), the Federal Reserve interest rate, and the national unemployment rate. The model’s predictions update every month, adjusting in response to economic conditions.
TSCL released a new version of the model, v1.2, in January 2025. The new version updates the model’s use of dates, processing data according to the federal fiscal year instead of the calendar year. The new model also reduces each prediction’s reliance on previous predictions made throughout the federal fiscal year.
In its announcement, the TSCL reiterated its support for President Donald Trump’s campaign to eliminate taxes on Social Security benefits. The agency also voiced its approval of The Senior Citizens Tax Elimination Act, a bill reintroduced by Representatives Thomas Massie (R-KY) and Daniel Webster (R-FL) that would reduce double taxation on Social Security benefits for middle-class seniors.
While seniors are already subjected to payroll tax on Social Security benefits throughout their careers, some must also pay taxes on the benefits throughout retirement. The legislation would amend the Internal Revenue Code of 1986 to end tier I railroad retirement benefits and Social Security benefits in an individual’s gross income.
“Eliminating taxes on Social Security benefits would be an excellent step to provide financial relief to American seniors, many of whom are struggling with a cost of living that is growing much faster than their incomes,” said TSCL Executive Director Shannon Benton. “It would also reduce double taxation, which is inherently unjust.”
TSCL projects that eliminating taxes on Social Security benefits would save the typical senior household about $3,000 annually if implemented in 2025. In its upcoming analysis for the March edition of its Advisor newsletter, the agency projects that a typical senior household would pay $3,940 in federal income taxes if Social Security benefits were excluded, compared to an estimated $7,022 under the current law—resulting in a savings of $3,082.
Removing taxes on Social Security benefits could also “relieve lagging COLAs,” says Benton. According to the TSCL, estimated savings from the bill would account for “nearly 69% of the buying power Social Security payments have lost since 2010 due to inadequate COLAs.” TSCL research estimates that the average yearly Social Security benefits for retired workers are worth approximately $4,442 less today than they were in 2010, after adjusting for inflation.
However, even if the bill is passed into law, low-income seniors would not see a difference in their Social Security benefits as these groups already do not pay taxes on them. The TSCL warns that without the legislation, “the tax thresholds that have not been adjusted for inflation since 1984 will result in more low-income seniors paying taxes as annual COLAs accumulate.”
“We need to do even more for low-income seniors whose dignity depends on Social Security payments that have already lost 20 percent of their buying power over the last 15 years,” said Benton. “Many lower-income seniors already do not make enough to pay taxes on their Social Security benefits, and the only way to help them is by reforming Social Security’s COLAs.”
The legislation comes as the Trump administration promises to implement “the largest tax cut in history,” that would include exemptions on tips, Social Security benefits, and overtime pay, according to White House press secretary Karoline Leavitt.
Trump assured voters during his campaign trail that if elected, he would incorporate widespread tax cuts and offset the taxes by enacting high tariffs on international trade, a strategy that has drawn mixed reactions and uncertainty from economists, who say it could potentially weaken Social Security’s solvency and invite retaliatory tariffs from trading partners.
“President-elect Trump’s suggestion to eliminate the taxation of Social Security benefits is likely to be popular with many older voters, but it could have the unintended consequence of causing Social Security to go insolvent two years sooner than currently forecast—by 2033,” Mary Johnson, an independent Social Security and Medicare policy analyst, told 401(k) Specialist in November.
Despite his calls to lower taxes and inflation on “Day 1” of his presidency, government data released on Wednesday found that prices increased in January, a possible result of Trump’s trade war. However, Trump faulted former President Joe Biden for the higher costs in a Truth Social post on Wednesday, writing “BIDEN INFLATION UP!”
Under Trump’s first month in office, consumer prices grew by 3% in January compared to a year ago, while egg prices skyrocketed 53% compared to last January.
Other rising goods include beef (5%) and bacon (6%), while bread, rice, and tomatoes all dropped in price.
EDITOR’S NOTE: This article has been updated to reflect the latest Social Security COLA forecast.