Key Points
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Many Social Security recipients are hoping for a generous cost-of-living adjustment (COLA) in 2026.
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Recent inflation data indicates that next year’s raise may be larger than this year’s.
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A more generous COLA isn’t necessarily a good thing for Social Security beneficiaries, even though it might seem like it is.
When you’re waiting on big news that affects your day-to-day finances, it’s never easy to sit tight and keep calm.
Say you’re anticipating a large holiday bonus from your employer and you know that announcement is coming in a matter of months. It can be difficult to push thoughts of that bonus out of your mind and focus on other things.
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Similarly, seniors on Social Security are ready to know what their 2026 cost-of-living adjustment (COLA) is going to amount to — and we’re getting closer to when an official announcement will be made.
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Recent inflation data just gave us a big clue as to what to expect out of next year’s Social Security COLA. Unfortunately, the news isn’t so great — even though it might seem positive at first.
Why seniors on Social Security won’t win out in 2025
The purpose of Social Security COLAs is to help beneficiaries maintain their buying power as inflation makes life more expensive across the board.
Social Security COLAs are based on third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Because we don’t have any third-quarter CPI-W data yet, it’s too soon to figure out what the upcoming COLA will be.
That said, experts can use the most current inflation data to make an educated guess about 2026’s COLA. Based on June’s inflation numbers, the Senior Citizens League, an advocacy group, is estimating a 2.6% COLA for 2026.
On the one hand, that’s good news, since the group’s last estimate pointed to a 2026 COLA of just 2.5%. On the other hand, a larger Social Security increase is not necessarily a good thing.
Because COLAs and inflation go hand in hand, a larger COLA is an indication that living costs are rising at a more uncomfortable pace. Put another way, what seniors on Social Security gain in the form of a more generous COLA, they might easily lose in the form of paying more for food, utilities, fuel, and other essentials.
It’s important to have realistic expectations
There are people who hope each year that their Social Security COLA will help them gain buying power. But that’s unlikely to happen.
The purpose of COLAs isn’t to help Social Security recipients get ahead financially. Rather, it’s simply to make sure they don’t fall behind.
Over the years, Social Security COLAs have failed seniors due to problems in the way they’re measured. There’s unfortunately a good chance that 2026’s COLA will fall short as well, no matter what it amounts to.
For this reason, in the context of COLAs, there are unlikely to be any real winners in 2026 — and it’s important to recognize that and have realistic expectations. In a best-case scenario, seniors will break even next year. But that’s not particularly helpful for retirees on Social Security who feel financially strained already.
Anyone in that boat should look at cutting expenses or seeking out part-time work, rather than banking on a COLA. Even if next year’s number is surprisingly high, it ultimately may not do a world of good.
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