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Yahoo
16 hours ago
- Business
- Yahoo
Senior Citizens League Projects 2.7% 2026 Social Security COLA. But Will It Cover Rising Prices?
Key Points The 2026 COLA is now projected to be 2.7%, which is higher than last year's 2.5% adjustment. Rising Medicare costs could consume a lot of the increase. The types of inflation that impact seniors are rising significantly faster than 2.7%. The $23,760 Social Security bonus most retirees completely overlook › According to the latest estimates by the Senior Citizens League, the 2026 Social Security cost-of-living adjustment, or COLA, is now expected to provide a 2.7% increase for beneficiaries. This is an increase over the 2.6% projection the same organization made in June, which was already an increase over May. If the latest projection is correct, this would give the average retired worker a monthly raise of about $54. However, this increased COLA estimate might not be as great as it sounds. There are a couple of big reasons why it might not do a good job of helping seniors keep up with rising prices, so let's take a closer look at why the projections increased, as well as two important points Social Security recipients should keep in mind. Why is the 2026 COLA estimate rising? The short answer is that the 2026 projected COLA is getting higher because of inflation. Specifically, the COLA is based on inflation data (the CPI-W) from July, August, and September. We recently got a look at July's CPI-W reading, and it is 2.5% higher than it was a year ago. We'll see August's inflation data next month, and then September's in about two months. In mid-October, the official 2026 Social Security COLA will be unveiled. Two big reasons why the COLA might not be enough Social Security COLAs are a valuable feature of the program for retirees and other Social Security recipients. They provide annual, inflation-based adjustments designed to help seniors and other beneficiaries keep up with the rising costs of goods and services. In theory, this makes perfect sense. If the inflation rate in the United States is 3% and benefits are adjusted upward by 3% as well, retirees who receive Social Security won't see any change in their purchasing power. Unfortunately, it isn't this simple. There's a lot to unpack when it comes to the real impact of the Social Security COLA on seniors' wallets. Here are two good reasons why a 2.7% increase might not be as good as it sounds. 1. The CPI-W is not senior-specific inflation As mentioned, the Social Security Administration uses the CPI-W to measure inflation. This stands for the Consumer Price Index for Urban Wage Earners and Clerical Workers. In other words, it's intended to measure inflation as it affects working Americans -- not the elderly. As one example, seniors tend to spend a greater percentage of their income on healthcare costs than the overall population. They also tend to spend more (as a percentage) on housing. And according to the July inflation data, outpatient hospital services and housing costs have increased by 6.4% and 3.7%, respectively -- significantly faster than overall inflation. In fact, there's a separate inflation metric known as the CPI-E, which is specifically designed to measure inflation on older people. The CPI-E showed a 2.9% increase in July, four-tenths of a percentage point more than the CPI-W. But unfortunately, it plays no role in determining cost-of-living adjustments. 2. Medicare costs are set to rise If you're a Social Security beneficiary who is 65 years of age or older, you probably already know this, but Medicare Part B premiums are typically paid directly from Social Security benefits. In other words, the premium amount -- which is $185 per month in 2025 for most retirees -- is deducted from the amount each Social Security beneficiary receives. In 2026, Medicare Part B premiums are expected to be $206.50. That's an 11.6% increase compared to this year. For the average retired worker, the $54 expected monthly COLA increase would become $33.50 when accounting for the Medicare increase. And for lower-income retirees, this could hit even harder. As an example, someone who gets $1,400 per month would get a $37.80 raise based on a 2.7% COLA. But it would effectively be just $16 after the expected Medicare increase. The bottom line on the 2026 COLA Of course, a 2.7% COLA would be better than nothing, but the point is that the average Social Security recipient is likely to lose purchasing power next year, even after the increase. Looking forward, it's important for all Social Security beneficiaries to keep these factors in mind as they consider each year's adjustment. The $23,760 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Senior Citizens League Projects 2.7% 2026 Social Security COLA. But Will It Cover Rising Prices? was originally published by The Motley Fool
USA Today
2 days ago
- Business
- USA Today
2026 Social Security COLA prediction rises to 2.7% as inflation and tariffs loom
The official COLA is still two months away, but July's inflation data has led multiple experts to the same prediction. A growing number of retirees are heavily reliant on Social Security to make ends meet. In the most recent iteration of an annual poll from Gallup, 62% of retirees said Social Security is a major source of income for them. That's up from 60% last year. Another 24% said their monthly benefits represent a minor (although meaningful) source of income in retirement. For any retiree using Social Security payments as a key factor in planning their budgets, few things have a bigger impact on their spending plans than the annual cost-of-living adjustment, or COLA. The COLA is designed to help Social Security payments keep up with the rising cost of goods and services, but many seniors have suffered in recent years as inflation has pushed prices higher on just about everything. While there is still two months until the official COLA for 2026 will be available, retirees just received the first data point necessary to determine how much they will receive next year. Here's where things stand now. How the government calculates the COLA Before diving into the latest data point, it's important to understand exactly how the Social Security Administration (SSA) calculates the COLA each year. Many people know the COLA is tied to inflation, but there's a very specific measure of inflation used to determine the exact number. It's called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The index is calculated monthly by the Bureau of Labor Statistics based on surveys of prices taken throughout the nation. There are over 200 price categories catalogued, and each receives a specified weight in calculating the total index. To determine the COLA, the SSA only looks at CPI-W readings from the third quarter (July through September). The year-over-year increase in the average CPI-W from those three months becomes the COLA for the following year. The BLS published the July CPI numbers on Aug. 12. That's the first data point necessary to determine next year's COLA. The August CPI numbers will come out on Sept. 11, and the September numbers will come out on Oct. 15. At that point, all of the necessary data will be available to calculate the 2026 COLA. Here's where the 2026 COLA stands now The July CPI report came in lower than expected. The commonly reported CPI-U came in 2.7% higher than last year. However, core CPI, which removes volatile food and gas prices, came in above expectations, increasing 3.1% year over year. A higher core CPI number suggests seniors could face significant pressure in keeping up with rising costs next year, as food and fuel prices do eventually move higher. The CPI-W increased 2.5% year over year, reaching 316.349. That's a month-over-month increase of 0.1%. Using the most recent month-over-month increase in inflation to model the next two months of CPI-W numbers, the 2026 COLA will come in around 2.6%. Using the average increase over the last three months, it'll come in around 2.7%. Both numbers are an increase from the 2025 COLA of 2.5%. There are good reasons to expect inflation to come in higher over the next two months. Specifically, the Trump tariffs announced in April have mostly been delayed until August. While businesses have worked to stockpile inventory ahead of the tariffs in order to keep their pricing low, they will eventually have to factor in the increased tax on imports and raise pricing if they want to maintain their profit margins. The Senior Citizens League estimates next year's COLA will be 2.7%, raising it from their 2.6% estimate last month. Independent analyst Mary Johnson also expects a 2.7% COLA for next year in light of the most recent CPI-W data. The Social Security Board of Trustees put its estimate at 2.7% when it released its annual report in June. As those estimates converge, it's likely the best guess. The data and trends support a 2.7% COLA for 2026, and unless there's a massive disruption in pricing over the next eight weeks, that's what retirees should expect to see. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The $23,760 Social Security bonus most retirees completely overlook Offer from the Motley Fool: If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets"could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. JoinStock Advisorto learn more about these strategies. View the "Social Security secrets" »
Newsweek
5 days ago
- Business
- Newsweek
How Much Social Security Payments Could Rise in 2026
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The projected Social Security cost-of-living adjustment (COLA) for 2026 is edging upward, according to fresh estimates from The Senior Citizens League (TSCL). In its July update released Tuesday, the advocacy group forecast a 2.7 percent increase in benefits for next year—up from the forecasts of 2.6 percent in June and 2.5 percent in May—reflecting recent signs that inflation is running hotter, pushing everyday costs higher. The 2025 COLA, set at 2.5 percent, took effect in January. While the new projection offers a modest boost for beneficiaries, the Senior Citizens League cautioned that the figure could shift again before the Social Security Administration (SSA) makes its official announcement in October. The group's model will continue to incorporate fresh inflation data over the coming months. "With the COLA announcement around the corner, seniors across America are holding their breath," TSCL executive director, Shannon Benton, said. "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." How the COLA Is Determined The SSA calculates the annual adjustment using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation based on the spending habits of younger, urban workers rather than retirees. Since 1975, COLAs have been applied each year using CPI-W data from the third quarter—July through September—with the intention of keeping benefits in step with rising costs for essentials like housing, food and medical care. Stock image/file photo: A Social Security card with U.S. Dollars. Stock image/file photo: A Social Security card with U.S. Dollars. GETTY Who Receives the COLA Boost The annual COLA applies across all programs administered by the SSA, including: Retirement benefits, including spousal benefits based on a partner's earnings Survivor benefits Supplemental Security Income (SSI) Social Security Disability Insurance (SSDI) If the 2.7 percent estimate holds, the tens of millions of Americans relying on these benefits will see the increase reflected in their monthly payments beginning in January 2026. COLA Concerns Concerns have been raised over President Donald Trump's nomination of Heritage Foundation economist E.J. Antoni to head the Bureau of Labor Statistics this week. Less than two weeks earlier, he had dismissed the agency's former commissioner, Erika McEntarfer, following the release of weaker-than-expected job figures. His nomination has heightened concerns that future BLS reports could be influenced to serve Trump's political goals. The BLS is the federal agency that produces key economic indicators, including the CPI-W. As commissioner, Antoni would oversee the collection, calculation, and release of inflation data. Antoni has long argued that Social Security is financially unsustainable and should be phased out. In a 2024 radio interview, he labeled the 90-year-old program a "Ponzi scheme," saying current beneficiaries should continue receiving payments but warning that future retirees should not count on it. "Seniors should know that the COLA on their Social Security benefits is tied to the CPI," former Treasury official Bruce Bartlett, who describes himself as "[o]nce a conservative, now progressive," posted on X this week. "If the CPI is artificially reduced, as Trump wants, your benefits will be reduced."
Yahoo
12-08-2025
- Business
- Yahoo
2026 Social Security COLA estimated at 2.7%. Why seniors still fall behind.
Social Security recipients are still forecast to see a 2.7% bump in their monthly checks next year, the same as last month's estimate, based on the latest inflation report, a new analysis showed. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the index used to calculate the annual adjustment to Social Security benefits, increased 2.5% in July. Overall inflation rose 2.7%, flat from June. The Federal Reserve's inflation goal is 2%. The annual adjustment, also known as the cost-of-living-adjustment (COLA), to Social Security benefits is meant to help seniors maintain their purchasing power over the years, but that hasn't always worked, said Mary Johnson, an independent Social Security and Medicare policy analyst. "Prices on the items that older Americans use the most remain elevated," she said. Categories that see higher levels of inflation than the overall rate include housing, medical costs, transportation and groceries. According to the Bureau of Labor Statistics' most recent weighting for older consumers, these categories when added together comprise more than 85% of household budgets of consumers age 62 and older. Why is July COLA estimate important? The actual Social Security COLA that the Social Security Administration typically announces in October is based on inflation data in the third quarter, or July, August and September. So July is the first month that will be considered for the 2026 COLA calculation. Here's how COLA is calculated: CPI-W for July, August and September are averaged, and then compared against the average of the same three months in the prior year. The percentage of difference is what the Social Security Administration uses to determine the annual COLA adjustment. CPI-W largely reflects the broad index the Labor Department releases each month, although it sometimes differs slightly. Last month, the overall consumer price index rose 2.7% and the index for urban wage earners increased 2.5%. Social Security's future The Social Security Office of the Chief Actuary estimates President Donald Trump's tax package moves the insolvency date for the Social Security trust fund forward by about three months from 2033 to 2032. Part of that is due to the increase in the standard deduction for those age 65 and older from 2025 through 2028. The higher standard deduction means less overall tax liability for most Social Security beneficiaries, but it also means lower revenues received by the Social Security and Medicare Trust Funds from the taxation of benefits. '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,' Johnson said. According to Social Security Trustees, a 25.8% cut in 2034 benefits would be necessary. Johnson calculates a 25.8% reduction could cut lifetime Social Security income for beneficiaries at an average age of 65 in 2025 by $176,400 over a 25-year retirement. How many people receive Social Security benefits? In July, 74.36 million people received Social Security, according to the Social Security Administration. These beneficiaries include retired workers, disabled workers, survivors of deceased workers and those receiving Supplemental Security Income. The average monthly benefit was $1,863.12 in July. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: Social Security 2026 COLA estimated at 2.7% but seniors still lagging Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
12-08-2025
- Business
- CNBC
Social Security cost-of-living adjustment may be 2.7% in 2026, new estimates find
Social Security beneficiaries may see a 2.7% cost-of-living adjustment in 2026, according to new estimates from policy experts, based on the latest government inflation data. That projected increase would be higher than the 2.5% adjustment beneficiaries saw in 2025. Social Security implements a cost-of-living adjustment every year to adjust benefits for inflation. The Social Security Administration typically announces the official change for the upcoming year in October. New estimates from both Mary Johnson, an independent Social Security and Medicare policy analyst, and the Senior Citizens League, a nonpartisan senior group, point to a 2.7% COLA for 2026, based on new July inflation data. Last month, Johnson had estimated a 2.7% Social Security COLA for 2026, while the Senior Citizens League had projected 2.6%. Social Security cost-of-living adjustments have averaged 2.6% over the past 20 years, according to the Senior Citizens League. To be sure, there are still two months of inflation data that will be factored into the official COLA calculation for next year. The official Social Security cost-of-living is based on three months' of government inflation data for July, August and September, which is averaged and compared to the same three months for the previous year. The percentage difference from one year to the next determines the COLA. The COLA is calculated based on a subset of the consumer price index, the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The consumer price index was up 2.7% over the past 12 months, according to new July data released by the Bureau of Labor Statistics on Tuesday. The CPI-W was up 2.5% over the last 12 months as of July. Tariffs had just a modest effect on the latest consumer price index data, though the impact of the new policies did show up in several areas including household furnishings and supplies. If tariffs do affect inflation in the coming two months, that may impact the Social Security cost-of-living adjustment for 2026.
