Social Security COLA estimate for 2026 still modest following August inflation

Social Security recipients are likely to see a modest cost-of-living adjustment next year, with the Senior Citizens League projecting a 2.7% increase for 2026.

The estimate, based on recent inflation data, suggests that retirees’ benefits will rise slightly more than this year’s 2.5% adjustment, but will fall short of the 3.2% increase seen in 2024.

The Virginia-based advocacy group’s latest projection would translate to an average monthly benefit increase of $54, raising the typical payment for retired workers from $2,008 to $2,062.

The Senior Citizens League has released nine estimates so far this year, each drawing on monthly inflation figures from the Bureau of Labor Statistics. The group notes that over the past two decades, the average annual adjustment has been 2.6%. The most recent estimates following the July CPI report placed the 2026 COLA between 2.6% and 2.7%.

The Social Security Administration calculates the annual cost-of-living adjustment by averaging inflation data from July, August, and September, specifically using the Consumer Price Index for Urban Wage Earners and Clerical Workers. The agency is expected to announce the official figure on October 15, with any adjustment taking effect in January 2026.

“The latest projection of a 2.7% cost-of-living adjustment for 2026 is certainly better than nothing,” Shannon Benton, executive director of the Senior Citizens League, told CBS News. “But for many seniors, that gain may quickly disappear once higher Medicare Part B premiums are deducted, turning what should be a raise into a wash.”

Benton added that for those living on fixed incomes, the adjustment is “another reminder of the gap between benefits and real-world costs.”

The consumer price index for August rose 2.9% on an annual basis, up from 2.5% in July, with imported products such as coffee and furniture seeing notable price increases. Economists have cautioned that a 2.7% adjustment may not be enough to offset the inflationary pressures many Americans are experiencing.

Separate reporting from Barron’s projects a slightly healthier 2.8% raise. That estimate, coming from independent Social Security and Medicare policy analyst Mary Johnson, would add $54.70 to the average monthly retirement benefit of $1,955.

However, most beneficiaries are unlikely to see the full increase, as Medicare Part B premiums are expected to rise to $206.20 a month next year, up from $185 this year. Those premiums are automatically garnished from enrollees' checks, Barron's noted.

Higher earners could see even larger deductions, and those with stand-alone Part D drug plans may also face steeper premiums due to changes in federal support for premium stabilization.

“That’s apt to look pretty underwhelming to most Social Security recipients,” Johnson told Barron's.

With the final adjustment set to be determined by September’s inflation data, the Social Security Administration’s official COLA announcement next month will certainly be one to watch for advisors and their retired clients alike.