Social Security COLA 2026 Increase Update as New Prediction Released

Newsweek

13-05-2025

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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Social Security recipients are likely to see the smallest cost-of-living adjustment (COLA) in five years in 2026, with new forecasts pegging the increase at 2.4 percent.
The estimate, released by The Senior Citizens League (TSCL), is slightly up from April's 2.3 percent forecast but remains below the 2.5 percent adjustment awarded for 2025.
This early prediction arrives as inflation continues to cool from pandemic-era spikes and as new economic policies—including a recent executive order from President Donald Trump—raise questions about future consumer costs.
Why It Matters
COLA affects more than 70 million Americans who receive Social Security benefits. The latest projection of a 2.4 percent adjustment for 2026 would mark the lowest since 2021, when benefits rose just 1.3 percent. It follows several years of elevated increases as a result of high inflation, including 5.9 percent in 2022 and 8.7 percent in 2023.
While the modest forecast reflects slowing inflation, it also signals tighter financial conditions ahead for retirees whose budgets are sensitive to even small changes in benefit growth.
The U.S. Social Security Administration logo is shown at the agency's office in Burbank, California, on November 5, 2020.
The U.S. Social Security Administration logo is shown at the agency's office in Burbank, California, on November 5, 2020.
VALERIE MACON/AFP via Getty Images
What To Know
"This year will be a closer year to watch because of the tariffs," Mary Johnson, an independent Social Security and Medicare analyst, told CNBC.
The Social Security COLA is determined by comparing third-quarter year-over-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
If inflation remains low, the adjustment remains minimal. The CPI-W rose 2.1 percent over the 12 months ending in April 2025, according to the Bureau of Labor Statistics.
Johnson and TSCL both project a 2.4 percent increase, though they caution that the number could shift with economic fluctuations.
Prescription drug costs may also play a role in retirees' actual cost of living. On May 12, President Donald Trump signed an executive order directing pharmaceutical companies to match U.S. drug prices to those in other countries or face payment caps from the federal government.
"Any efforts moving us in the direction of paying less ... is something that people could probably get behind," Leigh Purvis, of AARP's Public Policy Institute, said on CNBC.
What People Are Saying
Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek: "Cola will probably be insignificant given the fact grocery prices have risen so quickly. What many fail to understand about inflation, a 10 percent increase on prices followed by a much lower increase the following year is still an increase. Prices aren't coming down, just increasing more slowly."
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "While a COLA decrease may be viewed by some retirees as a bad thing, it's actually a good one for the overall future economic outlook. The stabilization of COLA indicates that the pricing pressures of inflation are finally starting to [subside]. While seniors are undoubtedly still having to do more dollar counting than a few years ago, not having to dramatically increase beneficiary spending shows prices are stabilizing, even if they're still higher than they were five years ago."
What Happens Next
The official COLA for 2026 will be announced by the Social Security Administration in October 2025, based on inflation data through the third quarter. Analysts and advocacy groups will continue updating forecasts monthly.
The Trump administration's prescription drug policy could trigger legal challenges and negotiation delays, while trade tariff developments may introduce additional volatility into consumer prices that ultimately influence the final COLA calculation.
"The bigger likelihood from this COLA will come from those who 100 percent rely on Social Security," Thompson said. "It is a fact that prices are continually rising, and what you could buy for $100 at the grocery store just a few years ago is not the same amount today. There will be some cutbacks needed."