People shop in Bayonne, New Jersey, on April 8, 2025.
Charlie Triballo | AFP | Getty Images
Social Security and Supplemental Security Income recipients will soon know how much their benefit checks will increase next year.
The 2026 Social Security cost-of-living adjustment announcement originally scheduled for Oct. 15 has been postponed to Friday due to the federal government shutdown. Nearly 75 million beneficiaries will see COLAs reflected in their January checks.
Based on the latest Consumer Price Index data, experts estimate that Social Security COLA in 2026 may be in the range of 2.7% to 2.8%. This is in line with long-term averages. But for retirees and other beneficiaries who rely on benefits to cover basic expenses, The size of the increase may not ease their struggles with rising prices.
“I just wish there was more,” said Kathryn Bailey, 74, of Washington, D.C.
Bailey, a retired oncology researcher, remembers an 8.7% cost-of-living adjustment in 2023 in response to a post-pandemic surge in inflation. Coke set a four-year inflation-adjusted record.
The raise of about $135 a month Bailey received “helped, but I've used it up,” she said.
She said the projected increase in 2026 “will have no effect,” citing rising health care, rent, food and other costs.
Costs for retirees have outpaced inflation
Experts estimate a potential increase of 2.7% to 2.8% is expected in 2026, which would increase the average monthly retirement benefit check by about $54.
The size of the Social Security COLA is calculated annually based on the rate of inflation. So if inflation is higher, Coke will be higher. When inflation is lower, the annual adjustment is also lower. In some years (most recently in 2016) this number is even zero if inflation does not increase from one year to the next.
As inflation has declined in recent years, cost-of-living adjustments have been more modest for retirees and other Social Security recipients. In 2024, the COLA is 3.2% and this year it is 2.5%.
The average cola content over the past 20 years was 2.6 percent, according to the Seniors Alliance, a nonpartisan seniors group.
Recent research from Goldman Sachs Asset Management shows that retirement costs have outpaced inflation. The company said that while retiree spending grew at an annual rate of 3.6% from 2000 to 2023, the consumer price index rose 2.6% during the same period.
While the pace of inflation has generally slowed in recent years from post-pandemic highs, some prices remain high.
The measure used to calculate COLA (Consumer Price Index for Urban Wage Earners and Clerks, or CPI-W) shows some categories such as home energy, motor vehicle maintenance and motor vehicle insurance have increased above average so far this year.
Coke delivers 'significant increase' over time
Yet some experts say the inflation protection provided by Social Security's cost-of-living adjustment is difficult to match elsewhere.
“A 20% increase over four years would be life-changing, even though it may not be consistent with the economy itself,” David Freitag, a financial planning advisor and Social Security expert at MassMutual, said of the recent cost-of-living adjustment.
“These are dramatic increases that change people’s lives,” Freitag said.
Freitag said few pension-type income streams offer such annual adjustments. Annuities that offer similar features are “very expensive,” he said. He added that annuities make sense, but retirees need to understand the terms.
Starting at age 62, cost-of-living adjustments will be built into benefits, Freitag said. Future retirees won't have to apply for benefits again, and those increases will be recognized in their benefit checks once they finally apply, he said.
AARP CEO Dr. Myechia Minter-Jordan said in a statement that Coke plays a “vital role” in helping retirement income keep pace with inflation and is a “lifeline to independence and dignity” for older Americans.
“Yet, even with Coke, 77 percent of seniors still face challenges with basic expenses,” Minter-Jordan said, citing a forthcoming AARP study.
Proposal proposes additional ways to measure future COLA
Some experts and advocates question whether another formula is better suited to measuring how retirees experience inflation.
Advocacy groups, including the Seniors Coalition, have lobbied to change the measure of COLA to the Consumer Price Index for Elders (CPI-E). According to the Bipartisan Policy Center, the index places greater emphasis on categories such as health care, housing and entertainment.
Other proposals call for changing the calculation to one based on the Chained Consumer Price Index, which takes into account substitutions consumers make in response to inflation, such as choosing to buy chicken when beef prices rise.
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While the Social Security Chief Actuary estimates that using the CPI-E will increase future annual COLA by approximately 0.2 percentage points, the Bipartisan Policy Center estimates that selecting the chained CPI will decrease future annual COLA by approximately 0.3 percentage points.
Future increases or decreases in COLA will affect the solvency of the Social Security Trust Fund, which is expected to be depleted in 2034. By then, 81% of benefits will have been paid out unless Congress enacts changes soon, according to the Social Security Trustees' latest annual report.
Another proposed change would be to limit the size of the COLA to the individual receiving the greatest benefit. The Committee for a Responsible Federal Budget estimates that one model of such a proposal could close one-tenth of Social Security's solvency gap while still providing full inflation protection for most beneficiaries.
Bailey, a retiree in Washington, D.C., said she would like to see COLA calculated in another way to match actual increases in areas such as health care, mortgages, rent and utility costs.
“I wish they would sit down and think about the percentage increase,” Bailey said.