Many people dream of enjoying retirement without worrying about money. But the truth is, retiring with only Social Security income is not the best plan.
That’s because these monthly payments usually cover less than half of what you earned during your working years. And for most seniors, cutting their income by 50% or more is very hard to manage.
Still, millions of retirees depend only on Social Security, especially if they didn’t have the chance or ability to save more while working. These people become highly dependent on the annual Social Security Cost-of-Living Adjustments (COLAs) to help keep up with rising expenses.
Let’s understand how COLAs work, why August is an important month for the 2026 increase, and what you should expect next.
What Are Social Security COLAs?
Every year, the Social Security Administration increases monthly benefits through COLAs if the cost of living goes up. These adjustments are meant to help retirees keep up with inflation.
In 2025, Social Security benefits received a 2.5% increase. This gave seniors a slight boost to cope with rising prices. But now the focus is shifting to what the 2026 COLA might be — and while there’s no exact number yet, we’ll know more very soon.
Why August Is So Important for 2026 COLA
The Social Security COLA is not based on guesses. It depends on real inflation data. Specifically, the government uses a measure called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks how prices of common goods and services change over time.
However, only the CPI-W data from July, August, and September matters for calculating next year’s COLA. These three months make up the third quarter of the year, and the average inflation from this period is used to set the COLA.
So, even if inflation seemed low earlier in the year, what really counts is how prices move in August and September. In mid-August, we’ll also get the July CPI-W numbers, which will give us the first real sign of what’s likely to come.
Will There Be a Big Social Security Raise in 2026?
At the moment, inflation has been moderate — meaning prices have gone up, but not too sharply. So, if this trend continues, the COLA for 2026 might be smaller than retirees hope.
However, there’s a twist. New government tariffs could lead to price hikes in August. If this happens, inflation could rise quickly — and with it, the COLA.
But here’s the catch: a bigger COLA means prices are rising faster. So even though seniors might receive more money, they’ll also need to spend more. For people already living on a tight budget, that’s not good news.
Is a Smaller COLA Actually Better?
It sounds strange, but yes — sometimes a smaller COLA is better. A small increase usually means inflation is under control, and the cost of living isn’t rising too much. This can help seniors avoid tough spending decisions, like cutting down on medicine, groceries, or travel.
In short, it’s not just about how much more you get — it’s about what that extra money can really buy.
Keep an Eye on August
The numbers from August will be key in figuring out your Social Security raise for 2026. Once the Bureau of Labor Statistics releases the CPI-W data for July, we’ll have a clearer idea of what’s coming. Then, by October, the official COLA will be announced.
So, if you’re a senior on Social Security, don’t plan your 2026 budget just yet. Wait a few more weeks — things will become clearer soon.
The Secret $23,760 Social Security Bonus You May Not Know About
Many retirees are missing out on extra income because they don’t know how to maximize their Social Security benefits. With the right claiming strategy, some people could earn as much as $23,760 more per year.
From delaying benefits to smartly using spousal options, there are legal ways to boost your retirement income. If you haven’t explored this, it’s worth looking into.
Relying only on Social Security may not give you enough financial comfort in retirement. While COLAs help, they often don’t fully keep up with rising prices. As August rolls in, seniors should pay attention to inflation trends, because they directly affect your 2026 benefit raise.
But remember, a higher COLA usually means life is getting more expensive. So whether it’s a small or big increase, what really matters is how well your income matches your needs. And if you can, consider other savings or income sources to ease the pressure in your retirement years.
