In August, the Social Security program marked its 90th anniversary, reflecting on its crucial role in supporting retirees since President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935.
The program has been a lifeline for millions, keeping many financially secure during retirement, although it has undergone numerous changes over the years.
Some of these changes, like the gradual increase in full retirement ages, have been permanent. Others, like the cost-of-living adjustment (COLA), are adjustments made annually to help Social Security benefits keep pace with inflation.
As 2025 comes to a close, estimates from The Senior Citizens League (TSCL) suggest that 2026’s COLA could be higher than the 2025 adjustment—good news for retirees—but there’s a catch.
How the SSA Determines COLA
The Social Security Administration (SSA) calculates COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation across categories like food, housing, transportation, and healthcare.
The SSA uses the average CPI-W for the third quarter (July, August, and September) of each year and compares it with the same period from the previous year. If there is an increase in the CPI-W, that percentage becomes the COLA for the following year.
For example, the 2025 COLA was set at 2.5% after the CPI-W in Q3 2024 was 2.49% higher than the previous year. If there’s no change in the CPI-W or if it decreases, there is no COLA, a scenario that has happened only three times in the history of Social Security: in 2010, 2011, and 2016.
What’s the Predicted COLA for 2026?
In August 2025, TSCL released an estimate projecting a 2.7% COLA for 2026. While this would be a slight increase from the 2025 COLA, it’s still lower than the average COLA seen since the annual adjustments began in 1975. Here’s a look at the past 10 COLAs:
2025: 2.5%
2024: 3.2%
2023: 8.7%
2022: 5.9%
2021: 1.3%
2020: 1.6%
2019: 2.8%
2018: 2.0%
2017: 0.3%
2016: 0.0%
TSCL estimates the COLA based on CPI data, Federal Reserve interest rates, and the national unemployment rate. However, the true COLA figure won’t be confirmed until the SSA announces it on October 15. If the 2.7% estimate proves correct, Social Security recipients could see their average monthly benefit rise from $2,007 to $2,061.
What’s the Catch with the 2026 COLA?
While the 2026 COLA may seem like a positive adjustment, the unfortunate reality is that many retirees may still feel that it doesn’t sufficiently offset the rising inflation they’re experiencing. Research by TSCL shows that Social Security recipients have lost approximately 20% of their purchasing power since 2010.
The cost of goods and services has risen faster than the COLA adjustments, leaving many struggling to make ends meet.
A Proposed Solution: R-CPI-E
One potential solution to this issue is to change the metric used to calculate COLA. The R-CPI-E (the Consumer Price Index for Elderly Americans) specifically tracks the spending habits of people aged 62 and older.
According to the Congressional Research Service, using the R-CPI-E would have resulted in higher COLAs in 33 of the last 39 years, with the exceptions being 2005, 2008, 2011, 2018, 2021, and 2022.
Despite this, there’s no indication that the SSA will adopt the R-CPI-E or any other metric in the near future. Retirees should, therefore, consider COLA adjustments as a modest cushion against inflation, rather than a guaranteed safeguard.
The $23,760 Social Security Bonus Most Retirees Overlook
For many Americans, retirement savings fall short of what’s needed for a comfortable retirement. However, there are some lesser-known Social Security strategies that could boost retirement income.
If you’re looking for ways to maximize your Social Security benefits, consider taking advantage of these often-overlooked “Social Security secrets.”
