Social Security COLA Forecast Boosts Slightly to 2.7%
The Social Security cost-of-living adjustment (COLA) forecast for 2026 slightly ticked up in July to a projected 2.7%, as prices on items that seniors spend on remains elevated.
With only two months remaining until the official COLA announcement, the prediction from both The Seniors Citizen League (TSCL) and independent Social Security and Medicare Policy Analyst Mary Johnson has narrowly risen in the last few months. TSCL forecasted a 2.6% figure in June, while Johnson’s prediction last month remains unchanged this month at 2.7%.
“With the COLA announcement around the corner, seniors across America are holding their breath,” said TSCL Executive Director Shannon Benton. “While a higher COLA would be welcome because their monthly benefits will increase, many will be disappointed. TSCL’s research shows that many seniors believe the COLA does not adequately capture the inflation they experience.”
The latest figures come amid new legislation that would slightly speed up the insolvency data for Social Security, as seniors already struggle to afford and access basic goods.
A new estimate from the Social Security Office of the Chief Actuary following President Donald Trump’s latest One Big Beautiful Act (OBBBA) moves the insolvency date for the Social Security trust fund up by nearly three months, from 2033 to 2032.
According to Johnson, the OBBBA temporarily raises the standard deduction amounts for those ages 65 and older for 2025 through 2028 and includes other tax changes with smaller effects. This means less overall tax liability for most Social Security beneficiaries, but also means lower revenues received by the Social Security and Medicare Trust Funds from the taxation of benefits, Johnson said.
“Congressional legislators did not include any provision to replace these program funds that were formerly earmarked for the payment of current Social Security and Medicare benefits,” explained Johnson in a statement. “This is ‘touching Social Security.’ It’s important for the public to be able to know what elected office holders really mean by ‘not touching Social Security’ and even more importantly, their commitment to finding the resources to finance currently scheduled benefits without cuts.”
Impending reductions are only cutting deeper following zero action from Congress, added Johnson. According to the Social Security Trustees report, a benefit cut of 25.8% in 2034 would be necessary if Congress chooses to wait until trust funds are exhausted. Such a slash could reduce lifetime Social Security income for an average 65-year-old beneficiary in 2025 by $176,400 over a 25-year retirement, Johnson predicts using a new theoretical model developed by her.
The model assumes a starting average benefit of $1,952 per month in 2025, average yearly COLAs of 2.5%, and that the hypothetical retiree receives benefits for 25 years through age 90. By 2033, a starting benefit of $1,952 per month would be about $2,320 with COLAs, but a 25.8% reduction would cut that amount by about $657 per month to about $1,722. By age 90 in 2050, the monthly benefit would be $1,000 per month lower than currently scheduled, Johnson reported.
“In other words, not touching Social Security, doing nothing, could result in deeper cuts than we frequently hear about because more people have come on the rolls,” she stated. “Without new or boosted sources of revenues, benefits would likely be adjusted to the level of payroll taxes the program is receiving which would trigger the deeper cuts.”
Inaccessibility to basic amenities
In the meantime, housing, medical costs, transportation, and groceries all surpassed the level of overall inflation, added Johnson. According to the Bureau of Labor Statistics’ (BLS) most recent weighting for older consumers, when added together, these categories comprise more than 85% of household budgets of consumers age 62 and older.
Seniors are also facing challenges accessing basic amenities like public transportation. In its recent 2025 Lifestyle Survey of 1,200 retirees, TSCL found that 20% of seniors must travel at least 30 minutes for healthcare services, while 33% travel a minimum of half an hour for entertainment. Fifty-five percent of seniors either do not have public transportation in their communities or are unaware of their public transportation options.
“American seniors’ lack of access of basic amenities in their communities is a major challenge,” said Benton. “Our research shows a statistically significant connection between convenient access to healthcare and entertainment services and seniors who are more satisfied with their current lives. Seniors with free or subsidized access to public transport also report higher life satisfaction.”
Latest CPI figures
According to BLS figures today, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% in July, after rising 0.3% in June.
The increase was mainly due to shelter, which rose 0.2% in July. The food index was unchanged over the month as the food away from home index increased 0.3% while the food at home index dropped 0.1%. Other indexes that fell include energy, at 1.1%, and gasoline, at 2.2%.
Increases over the month were medical care, airline fares, recreation, household furnishings, and operations, and used cars and trucks.
July’s figures are especially important to the annual COLA as it is primarily based on inflation data in the third quarter. Data for July, August, and September from the CPI-W is averaged and then compared against the average of last year’s third quarter. The difference is what the Social Security Administration (SSA) uses to define the annual COLA figure.
The annual change in the CPI-W for July 2025 is 2.5%.
BLS commissioner replacement
Tuesday’s findings come amid new changes at the BLS.
President Donald Trump on Monday announced his intention to nominate E.J. Antoni as the next commissioner of the bureau, following his firing of Erika McEntarfer on Aug. 1. Trump had accused McEntarfer of manipulating data after the BLS reported slower nonfarm job growth for July. The bureau had also revised data from prior months, showing a growth rate of 35,000 over the past three months and the largest two-month downward revision since April 2020. It was also the largest revision since the 1960s.
McEntarfer defended the alteration, noting that previous data had been “manipulated for political purposes.” The revision largely aligns with many economists and market analysts who have observed a slower economy following the tariff war and stronger market uncertainty.
Antoni, a chief economist at conservative think tank the Heritage Foundation, has been a staunch critic of the BLS. In a podcast episode hosted by former White House Advisor and Trump ally Steve Bannon, Antoni called for McEntarfer’s removal as head of the bureau following the release of July’s jobs report.
“Our Economy is booming, and E.J. will ensure that the Numbers released are HONEST and ACCURATE,” Trump wrote in a Truth Social post on Monday.
In the meantime, Deputy Commissioner William Wiatrowski is serving as acting commissioner for the BLS. The bureau operates under the Department of Labor (DOL).
The firing has led some to voice concerns over whether the president is intentionally misleading official inflation numbers, and the negative impact it could have on the annual COLA figure.
In a recent report, Morningstar’s Head of Research Hal Ratner explained how figures like Social Security are directly indexed to inflation. “If inflation numbers are manipulated, individuals are going to feel the downstream effects,” he wrote. “The US is the number-one economy and the most trusted market, specifically because institutions like the BLS are viewed as transparent and independent…But this perception and status could face challenges if there were changes to how the BLS operates in response to outside pressure.”
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.
