Social Security cost-of-living adjustment could be 2.7% in 2026, according to new estimate
Social Security beneficiaries may receive a 2.7% cost-of-living adjustment (COLA) next year, slightly higher than the 2.5% increase they received this year. This estimate comes from the Senior Citizens League, an advocacy group, which made the prediction after the Bureau of Labor Statistics released its latest inflation figures. AARP also released their 2026 COLA estimates, with experts predicting a modest adjustment similar to the 2025 COLA.
The Social Security Administration makes a yearly cost-of-living adjustment to ensure benefits keep up with inflation. The adjustment, set to be announced in October and take effect in January 2026, is based on inflation data from July, August, and September. The Consumer Price Index (CPI) showed a 2.7% annual inflation rate in July, remaining steady from June.
While the inflation rate has stayed below 3% so far in 2025, experts anticipate it may rise later in the year due to factors like tariffs impacting consumer prices. Economists predict headline CPI could reach 3.7% and core CPI could hit 3.8% by the second quarter of 2026. Some experts, like labor economist Teresa Ghilarducci, believe a moderate COLA adjustment might not be enough to cover projected inflation rates.
The 2.5% COLA implemented this year raised the average Social Security retiree’s payment by around $49 per month. The average monthly benefit for all beneficiaries was $1,861 in June 2025, with retired workers receiving $2,005 on average, according to the Senior Citizens League.
In addition to the COLA, senior citizens could benefit from a temporary tax deduction of up to $6,000 for Americans aged 65 and older, included in President Trump’s recent legislation. This additional provision aims to provide further financial relief to older Americans.
As we await the official announcement of the 2026 COLA adjustment in October, seniors are advised to stay informed about potential changes to their Social Security benefits. The impact of inflation on retirement income underscores the importance of staying updated on COLA adjustments and other financial considerations for retirees.
Author: Mary Cunningham, CBS MoneyWatch reporter. Mary has a background in journalism and has previously worked with CBS News in various capacities before joining the business and finance vertical.
