Key Points
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Inflation increased yet again in August, resulting in a higher expected COLA for 2026.
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The official adjustment will be announced next month, but it’s likely to be higher than 2025’s raise.
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While this may seem like a good thing, there’s a sneaky downside to a larger COLA.
A new report from the Bureau of Labor Statistics revealed that inflation surged again in August. The Consumer Price Index climbed 0.4% last month, increasing by 2.9% over the last 12 months.
New inflation data also means new predictions for the 2026 cost-of-living adjustment (COLA), as this figure is directly tied to changes in average costs. Nonpartisan advocacy group The Senior Citizens League estimates that next year’s COLA will be 2.7% based on the most recent data, but there’s good and bad news for retirees.
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The good news about next year’s adjustment
The Senior Citizens League makes regular COLA estimates based on the Bureau of Labor Statistics’ monthly Consumer Price Index report. While these predictions are not affiliated with the Social Security Administration, they can help gauge what next year’s raise might look like.
Retirees can expect the official COLA announcement from the Social Security Administration in October, after September’s inflation report is published. But unless inflation shifts significantly this month, the COLA likely won’t be too far off from The Senior Citizens League’s 2.7% estimate.
Since January, the COLA estimate has been steadily increasing. The current 2.7% prediction is significantly higher than the 2.1% estimate from January, and it’s also higher than the 2.5% adjustment retirees received this year.
| Month | COLA Estimate |
|---|---|
| September | 2.7% |
| August | 2.7% |
| July | 2.6% |
| June | 2.5% |
| May | 2.4% |
| April | 2.3% |
| March | 2.2% |
| February | 2.3% |
| January | 2.1% |
Source: The Senior Citizens League. COLA = cost-of-living adjustment.
The average retired worker collects around $2,008 per month in benefits, according to August 2025 data from the Social Security Administration. A 2.7% COLA would amount to around $54 per month. For those who are stretching every dollar to make ends meet, that extra cash can go a long way.
The downside to a higher COLA
A higher COLA puts more money in your pocket, which is largely a good thing. However, because the adjustment is directly linked to changes in inflation, it also means that costs have been steadily increasing throughout the year.
The COLA’s purpose is to help benefits keep pace with rising inflation, but historically, it has struggled to do just that. Benefits lost around 20% of their buying power between 2010 and 2024, according to a report from The Senior Citizens League, as inflation rates consistently outpace the COLAs.
Uncertainty surrounding tariffs could also complicate things. If sweeping new tariffs take effect later this year or next year, they won’t factor into the COLA calculations for 2026 — even though retirees will feel them in their wallets. Inflation could also continue to surge into next year, making it harder for the COLA to keep up.
This isn’t to say that the COLA won’t be helpful at all. For those who are struggling to make ends meet, any extra cash is beneficial. But it also won’t go as far as some people are hoping, so it’s a good idea to keep realistic expectations about what a higher COLA actually means for your budget.
How to depend less on the COLA
Sixty-two percent of retired Americans say that Social Security is a major source of income, according to a 2025 Gallup poll, so it makes sense that most people are eagerly awaiting next year’s benefit raise.
However, it may be wise to start finding ways to decrease your dependence on Social Security. This won’t be possible for everyone, especially those who are well into retirement. But if you can generate even a small source of passive income, pick up some part-time work, or take larger steps to reduce your expenses, such as moving to a more budget-friendly city or state, that can better protect you against inflation.
We won’t know the official COLA until next month, but historically, these adjustments have struggled to protect retirees from rising costs. The more steps you can take to reduce your dependence on Social Security, the safer your retirement will be.
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