The Social Security Administration (SSA) will announce the official Cost of Living Adjustment (COLA) figure for 2026 on October 15, 2025. The COLA is the amount that is added to Social Security benefits to prevent inflation from affecting beneficiaries’ paycheck amounts. It is calculated based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is provided monthly by the Bureau of Labor Statistics. To calculate the COLA, the data for the third quarter of the current year is compared to the same period of the previous year.
The resulting figure will be the COLA percentage increase for the following year. The COLA data for 2026 will not be officially announced until October, but associations such as The Senior Citizens League and analyst Mary Johnson have published provisional figures of 2.6% and 2.7%. In addition, both Johnson and other experts warn that both Medicare and Part B will also increase, and will consume the annual COLA.
Social Security Administration (SSA) and inflation in the US
The Social Security Administration (SSA) is the U.S. government agency responsible for the financial security of its citizens. Currently, it provides benefits primarily to retirees, people without financial resources, low-income people, people with disabilities, and survivors. Many people depend entirely on welfare payments for their livelihood, so the importance of the SSA is substantial. One of the main problems facing Social Security today is rising inflation. For this purpose, it makes use of a tool called Cost of Living Adjustment, more commonly known as COLA.
What is COLA?
Cost of Living Adjustment (COLA) is the percentage applied to the amounts received by Social Security beneficiaries. The purpose of this is to protect the purchasing power of beneficiaries in situations where inflation could put them at risk. How is it calculated? It is very simple. Each month, the Bureau of Labor Statistics publishes the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). To calculate the COLA, you would have to buy the data for the last 3 months of the quarter (July, August and September) of the current year, and compare it to the same period of the previous year.
The difference between the two will determine the COLA to be applied the following year. What happens if there is no difference? The truth is that this has only happened in 2010, 2011 and 2016. If so, the current year’s value would be maintained.
What will be the COLA for 2026?
Social Security will announce the 2026 COLA on October 15, 2025. In addition to the COLA update, the following data is also expected to be announced:
- Social Security tax wage limit.
- Maximum monthly benefit limit.
- Earnings test limit.
- Earnings required to obtain work credits.
Despite having to wait to know the official COLA figures for 2026, some bets have already been placed. For its part, the Senior Citizens League has released an estimate of 2.6%, basing its calculations on inflation for months throughout the year. On the other hand, independent Social Security and Medicare analyst Mary Johnson is talking about 2.7%.
Warnings about COLA
Beneficiaries are very attentive to the predictions and especially to the official publication by Social Security in October. It makes sense for them to expect a high percentage, since it represents a high increase. However, we must not forget that this increase is in turn a response to the rise in the price of products and life in general. That is why the most “sensible” thing to do is not to increase the COLA. In addition to this, experts believe that the possible increase that is expected will not be enough.
It has been stated that “rising Medicare premiums and a slow response to retirees’ real costs may undermine any gains – especially for low-income beneficiaries”. For her part, Mary Johnson has also stated that it is not uncommon for Part B premiums to consume much or even all of the annual COLA, leaving little extra to cover other large cost increases.” We will have to wait until October to know the official figures and see what impact they have on beneficiaries’ benefits.
Find out about the changes that Social Security will bring in 2026!