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USA Today
5 hours 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" »
The Hill
2 days ago
- Business
- The Hill
Social Security COLA projected to be slightly higher than 2025's, but ‘many will be disappointed,' group says
(NEXSTAR) – The Senior Citizen's League is pretty confident that many seniors receiving Social Security benefits will be 'disappointed' by next year's cost-of-living increase. In its latest projection, the senior advocacy group estimated that the 2026 cost-of-living adjustment (COLA) would amount to a 2.7% increase. This marks a bump over the increase that retirees saw in 2025 (2.5%), but it's still not enough to cover the ever-rising costs of goods and services that seniors are paying, TSCL believes. 'While a higher COLA would be welcome because their monthly benefits will increase, many will be disappointed,' Shannon Benton, the executive director of TSCL, was quoted as saying in a press release issued this week. 'TSCL's research shows that many seniors believe the COLA does not adequately capture the inflation they experience.' Senior group proposes 'one-time catch-up payment' for Social Security beneficiaries The research Benton refers to includes a survey of nearly 2,000 beneficiaries. Of those participants, 94% said they felt this year's COLA increase of 2.5% 'was too low and that their monthly Social Security checks would fall behind.' The survey also indicated that 57 percent of seniors live on less than $2,000 per month, and a good chunk of that group (about a fifth) said they spent half that on healthcare costs alone. These issues, TSCL argues, don't stem only from lower-than-desired COLA increases, but rather how those increases are calculated in the first place. TSCL has long argued that the metrics used to calculate the annual COLA (i.e., the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners, which itself is a measure of the change in prices for common consumer goods and services) do not take into account the costs that elderly Americans are paying for things like medicine, housing and groceries. In the aforementioned survey, the vast majority of Social Security beneficiaries agreed that the Bureau of Labor Statistics should consider using another set of data to calculate the COLA, like the Consumer Price Index for the Elderly, which focuses on costs affecting Americans ages 62 and up. In the absence of any real movement on that idea, TSCL has also been advocating for a 'one-time catch-up payment' of $1,400 to be sent to everyone who qualifies for Social Security, pointing to 2009's Economic Recovery Payments or the COVID-era Economic Impact Payments as evidence of the government's previous efforts to provide direct financial assistance to citizens. 'A catch-up payment would help restore that lost value and provide urgently needed relief for retirees living on fixed incomes.' A representative for the Social Security Administration did not return a request for comment on the proposal. The amount of next year's COLA increase won't be officially announced by the Social Security Administration until October. The 2026 increase is based on Labor Department data from the third quarter (July, August and September) of 2025.
CNBC
5 days ago
- 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.
Miami Herald
17-07-2025
- Business
- Miami Herald
Social Security's 2026 COLA on track to break a 29-year trend
On July 15, 2025, the Bureau of Labor Statistics released the latest CPI numbers. That's a really boring sentence, but the numbers are actually extremely important and should be very interesting to Social Security retirees. That's because the Consumer Price Index for Urban Wage Earners and Technical Workers (CPI-W) is used to determine the Cost of Living Adjustment (COLA) that retirees will receive in 2026. That's better known as the annual Social Security benefits increase, or the raise that Social Security retirees get in most years. Don't miss the move: Subscribe to TheStreet's free daily newsletter The Social Security Administration looks at changes to a basket of goods and services that is included in the consumer price index. The average changes to CPI-W are calculated in the third quarter of the year, and that's the raise retirees get on their Social Security benefits. Since the June numbers are the first ones to be released from this third quarter's data, they provide a very important glimpse into what next year's raise may look like. And based on those numbers from July 15, the 2026 Social Security COLA is on track to do something it has not done in 29 years. The July CPI data showed that the Consumer Price Index rose 2.7% on an annual basis, while the CPI-W numbers showed a 2.6% year-over-year increase. While it's the CPI-W numbers on which COLAs are based, experts are also making projections for what the CPI numbers will look like for the next two months, which are also included in the benefit calculation. Related: Millions of Medicare beneficiaries could see major price shock Based on those projections, the Senior Citizens League has predicted a 2.6% benefits increase next year, up from the 2.5% raise predicted last month. Independent Social Security and Medicare policy analyst Mary Johnson, however, is projecting a 2.7% bump. Regardless of which of these is right, however, the COLA is about to buck a 29-year trend. That's because, for the first time since 1996, the COLA is going to be above 2.5% for five consecutive years. This is a once-in-a-generation shift for today's retirees, and it is not something that most people will probably see again in their lifetime. If the COLA comes in as projected, Social Security is going to hit a major milestone. For the first time since 1996, retirees are going to see a COLA that has been equal to or above 2.5% for five years running. Here's what the recent COLAs have looked like: 2021: 5.9%2022: 8.7%2023: 3.2%2024: 2.5%2026: 2.6% or 2.7% (projected) And the last time the COLAs had a five-year streak where they were at 2.5% or higher was from 1993 to 1996. Here were the COLAs during that time period: 1992: 3.0%1993: 2.6%1994: 2.8%1995: 2.6%1996: 2.9% That period in the 1990s was actually part of a decades-long streak of high COLAs due to high inflation. Since that time, however, there has not been another five-year period when raises were so high. In fact, there were several years in the mid-2000s when COLAs were under 1.00%. Related: Jean Chatzky sends strong message on 401(k)s, Social Security While it may seem, in theory, that five years of raises are good for retirees, that's very much not the case. In fact, this has been a tough period for seniors due to the significant inflation resulting from the fallout of the Covid pandemic. High inflation is not good for people on a fixed income with conservative portfolios, which fits the description of most retirees. More on retirement: Dave Ramsey offers urgent thoughts about MedicareJean Chatzky shares major statement on Social SecurityTony Robbins has blunt words on IRAs,401(k)s Still, seniors on Social Security can expect a record-breaking raise this year. Hopefully it will be the last one that's so high as inflation comes under control. Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
11-07-2025
- Business
- Yahoo
The Social Security Board of Trustees Just Updated Its 2026 Cost-of-Living Adjustment (COLA) Forecast. Here's How Much Your Benefits Could Increase.
The annual Social Security COLA is based on inflation during July, August, and September. The Board of Trustees files a report with Congress every year, including a forecast for the COLA. Expectations for the annual cost of living adjustment have climbed since last year's report. The $23,760 Social Security bonus most retirees completely overlook › One of the most important pieces of Social Security retirement benefits is the annual cost-of-living adjustment, or COLA. Without the COLA, many seniors would face significant shortfalls in their retirement budgets as prices for housing, healthcare, and groceries increase over time. Over the last few years, as inflation has reared its ugly head, many retirees have come to rely more and more on the annual COLA. While we're still months away from the official announcement for next year's COLA, multiple analysts have published their best estimate for what kind of pay bump retirees could receive next year. Estimates from The Senior Citizen's League and independent analyst Mary Johnson both put the number at 2.5% in their most recent reports. The Social Security Board of Trustees, the people in charge of the trust fund and who report on the financial status of the program to Congress, have their own estimate they publish once per year. They just published their 2025 annual report, and they have a new COLA estimate for 2026 that differs from the third-party estimates. The annual COLA figure is released around the same time every year in the second week of October. That's because the COLA is based on data collected over the summer between July and September. Specifically, it's based on the year-over-year increase in a measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Every month, the Bureau of Labor Statistics surveys thousands of prices around the country for everything from apples to water bills. To calculate the CPI-W, each price is weighted by its relative portion of a standard budget for a working-age city dweller. The results are usually compiled and published by the second week of the following month. The Social Security COLA is based on the average year-over-year increase in the CPI-W during the third quarter of the year, which ends in September. When the September CPI-W number gets published in October, the Social Security Administration is able to announce the COLA that will go into effect for benefits payments that begin the following January. When the Social Security Board of Trustees publishes its annual report, it includes multiple estimates for the COLA. There's a high-cost, low-cost, and intermediate estimate. These are based on the net cost of each scenario to Social Security based on both outflows (benefits payments) and inflows (tax revenue). The high-cost estimate is actually the case where the COLA is lowest. While Social Security will pay out less in benefits in that case, low inflation will also curb how much wages rise and in turn how much Social Security will collect in revenue. And since there are more workers paying into Social Security than retirees collecting benefits, a super low inflation environment can be bad for the overall health of Social Security. The board updates its COLA estimates each year along with its full outlook for Social Security and if and when the program will deplete its trust fund. Here are its 2026 COLA estimates from May 2024 and its most recent update from June 2025. Case May 2024 June 2025 High-cost 1.8% 2.4% Intermediate 2.2% 2.7% Low-cost 3% 3% Source: Social Security Administration. As you can see, the board has raised its estimate for the 2026 COLA significantly since last year. It's worth pointing out that many analysts, not just the trustees, expected inflation to fall faster than it has since last year. The Federal Reserve has tried to tame inflation by keeping rates higher for longer. At the start of last year, investors were thinking the Fed would cut rates by 150 basis points by the end of 2024. It only cut 100 basis points, and it signaled fewer-than-expected rate cuts this year, too. On top of that, there's a growing amount of uncertainty driven by the Trump administration's constantly changing trade policies and ongoing conflicts in Europe and the Middle East. As such, there's a good chance we see a pickup in inflation this summer, pushing the COLA higher. That said, the trustees' intermediate estimate for the 2025 COLA was 2.6%, but retirees only ended up with a 2.5% bump. So, it's possible the trustees are overestimating how much prices will increase this summer. As things stand, though, Social Security beneficiaries should expect to see a bump somewhere between 2.4% and 3% based on all the data available. 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. The Social Security Board of Trustees Just Updated Its 2026 Cost-of-Living Adjustment (COLA) Forecast. Here's How Much Your Benefits Could Increase. was originally published by The Motley Fool
