Social Security recipients are getting their first glimpse of what next year’s cost-of-living adjustment (COLA) might look like — and early indicators suggest a modest increase in 2026.
The key measure used to calculate annual COLAs, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), rose 2.5 percent in July compared with the same month last year, according to Bureau of Labor Statistics data released Aug. 12. The final adjustment will be based on average CPI-W changes for the third quarter — July through September — with the official 2026 COLA announcement expected in October.
Economists are projecting that the 2026 COLA will likely land in the low- to mid-2 percent range, roughly in line with this year’s 2.5 percent adjustment. Indivar Dutta-Gupta, a visiting fellow at the National Academy of Social Insurance, said the increase could come in around 2.6 to 2.7 percent, while Mike Lynch of Hartford Funds placed his estimate slightly lower.
At that rate, the average retired worker’s monthly benefit — currently about $2,006 — would rise by roughly $50. Survivor benefits, averaging $1,574, would climb by about $39, and Social Security Disability Insurance payments, averaging $1,445, would increase by about $36.
The Social Security Administration’s annual COLA is designed to help beneficiaries keep pace with inflation. AARP officials note that automatic adjustments, in place since the 1970s, remain a crucial safeguard as older adults contend with rising costs of food, housing, medical care, and prescription drugs.
Still, some experts caution that the 2026 increase may fall short of meeting actual household pressures. Labor economist Teresa Ghilarducci of the New School warned that tariffs and other factors could push prices higher, making a 2.5 percent boost feel insufficient for many retirees. Others add that because the COLA is based on costs for urban workers, it may not fully reflect the heavier medical and housing expenses older adults face.
If projections hold, the 2026 COLA will mark a third straight year of moderate increases, following larger boosts during the recent inflation surge.
Source: AARP