Social Security COLA could increase 2.7% in 2026, new estimate shows

Social Security beneficiaries could see a 2.7% cost-of-living adjustment (COLA) in 2026, which is slightly above the 2.5% increase U.S. retirees received in 2025.

That's according to an estimate from the Senior Citizens League, which recently posted its latest COLA prediction based on August inflation figures figures from the Bureau of Labor Statistics. The Virginia advocacy group has released nine COLA estimates so far this year, based on monthly BLS data.

According to the group, a 2.7% COLA would raise the average monthly benefit for retired workers by $54, from $2,008 to $2,062. The Senior Citizens League predicted the same cost-of-living adjustment in August.

The cost-of-living adjustment has averaged 2.6% over the last 20 years, according to the Senior Citizens League. A COLA of 2.7% would be higher than this year's adjustment of 2.5%, but below the 3.2% boost seniors received in 2024.

The Social Security Administration (SSA) makes a cost-of-living adjustment each year based on inflation data from July, August and September. Thursday's CPI report shows that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the figure the SSA uses to make its annual adjustment, increased 2.8% on an annual basis in August, up from 2.5% the month prior.

The SSA is scheduled to announce its adjustment in October, which would go into effect in January 2026. "This year, the COLA will be determined on October 15, when the Bureau of Labor and Statistics releases the CPI-W for September," the agency told CBS MoneyWatch.

The COLA is intended to ensure that benefits payments for U.S. seniors keep pace with inflation. However, economists have warned that a 2.7% adjustment may not be enough to stave off the inflationary pressures Americans are facing.

The CPI report released Thursday suggest that inflation is on the rise with CPI rising 2.9% on an annual basis in August compared to 2.7% in July. Imported products such as coffee and furniture have grown more expensive since last year, which economists point out could be due to tariffs pushing up prices.

Routine monthly paycheck reductions for certain Social Security recipients could also cancel out the cost-of-living adjustment, Shannon Benton, the executive director of the Senior Citizens League, told CBS MoneyWatch in an email.

"The latest projection of a 2.7% cost-of-living adjustment for 2026 is certainly better than nothing," said Benton, "but for many seniors, that gain may quickly disappear once higher Medicare Part B premiums are deducted, turning what should be a raise into a wash."

She added, "For those living on fixed incomes, it's another reminder of the gap between benefits and real-world costs."