COLA Estimate for 2026 Signals Modest Social Security Bump
The projected cost-of-living adjustment, or COLA, for Social Security beneficiaries in 2026 has increased slightly to 2.4% based on the latest inflation data. This adjustment is up from last month’s estimates but still falls short of the 2.5% COLA retirees received in 2025. It is also expected to be the smallest benefit increase in the past five years.
While inflation appears to be slowing down, experts are warning that the 2026 COLA may not be enough to keep up with the rising costs that many older Americans are facing, particularly when it comes to essentials such as housing, groceries, and medical care. The annual COLA is determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which was 2.1% higher in April compared to a year earlier, reflecting slower inflation overall.
However, some of the major cost burdens for older adults, such as food, housing, and insurance, remain high. Independent Social Security and Medicare policy analyst Mary Johnson highlighted that consumer prices, especially for items like groceries, meats, and eggs, continue to be elevated.
Both Johnson and The Senior Citizens League are predicting a 2.4% COLA adjustment for 2026. Despite the CPI-W not fully capturing retiree spending, particularly healthcare costs, COLAs often fall short of meeting seniors’ financial needs. One exception to rising costs has been prescription medications, with drug prices increasing by only 2.3% over the past year due to cost-saving measures implemented in 2022.
One such measure is the Inflation Reduction Act, which requires drugmakers to pay rebates to Medicare if prices increase faster than inflation. Additionally, a new $2,000 cap on out-of-pocket costs for Medicare-covered prescription medications has provided relief to older adults with chronic conditions. President Donald Trump’s executive order promoting “most-favored nation” pricing for prescription drugs may not have an immediate impact on Medicare-covered drug pricing.
The official COLA for 2026 will be announced in October when the Social Security Administration finalizes inflation data for July, August, and September. Until then, analysts will continue to update their estimates as new inflation reports come in. Older Americans are advised to prepare for potential financial challenges despite the modest increase in the projected COLA.
