Social Security Cost-of-Living Adjustment May Rise to 2.8% in 2026, Boosting Retiree Benefits

Projected Social Security COLA for 2026 May Reach 2.8%

New estimates indicate that Social Security beneficiaries could receive a cost-of-living adjustment (COLA) of approximately 2.7% to 2.8% in 2026. This would represent a modest increase from the 2.5% boost applied in 2025. Mary Johnson, an independent Social Security and Medicare policy analyst, anticipates a 2.8% adjustment, which would raise the average monthly retirement benefit by about $54.70.

Similarly, the Senior Citizens League projects a 2.7% COLA, corresponding to an average monthly increase of $54. The Social Security Administration reported the average monthly retirement benefit at $1,955 as of August 2025.

Basis for Estimates and Official Announcement Timeline

The COLA calculations derive from recent consumer price index data, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), with the latest figures through August 2025. The official 2026 COLA will be announced in October after incorporating September inflation data. Johnson noted that for the COLA to settle at 2.7%, inflation would need to remain virtually flat in September, making the 2.8% estimate highly probable.

Context: Historical COLA Trends and Inflation Concerns

While the projected 2026 increase surpasses last year’s adjustment, it remains below the notably high COLAs seen in 2022 and 2023, which were 5.9% and 8.7%, respectively. These record increases followed inflation surges triggered by the Covid-19 pandemic.

Retirees express apprehension about future inflation spikes, particularly related to tariffs. A recent Nationwide Retirement Institute survey found that half of retirees are ‘terrified’ about tariffs’ impact on their retirement income and savings, with two-thirds believing tariffs could drive inflation beyond COLA coverage. More than half of current beneficiaries have already curtailed discretionary spending as expenses outpace benefit growth.

Rising Medicare Costs Add to Financial Pressure

Compounding these challenges, Medicare costs are expected to rise. Medicare trustees estimate that the standard monthly Part B premium could increase by $21.50 to $206.50 in 2026, nearing the highest premium hike in program history. Additionally, Medicare Part D prescription drug plan premiums may rise by up to $50 per month.

Inflation’s Varied Impact on Retirees

Although inflation rates have moderated from pandemic-era peaks, seniors continue to face elevated prices, especially for essentials like groceries. Jean-Pierre Aubry, associate director at Boston College’s Center for Retirement Research, highlighted that inflation affects retirees differently depending on their financial situations. Those relying on fixed-income investments may experience diminished returns, whereas seniors with mortgage debt might benefit as inflation reduces the real value of their liabilities.

COLAs are applied annually, often lagging behind inflation increases during the year. Aubry suggests that retirees who manage spending to avoid abrupt fluctuations can mitigate some negative effects of this timing.

Financial Literacy and Planning Remain Critical

Despite 74% of retirees feeling capable of managing Social Security benefits independently, only about one-third express confidence in their understanding of the program. Tina Ambrozy, head of strategic customer solutions at Nationwide, recommends consulting financial advisors to bridge knowledge gaps and optimize benefit management amid rising costs.