Key Points
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Social Security’s annual cost-of-living adjustments (COLAs) protect the purchasing power of benefits from inflation.
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The board of trustees expect benefits to increase 2.4% to 3% next year, which would mean an extra $48 to $60 per month for retirees.
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Retired workers may find the 2026 COLA insufficient due to increased Medicare Part B premiums and the impact of tariffs.
The Social Security Administration will announce the cost-of-living adjustment (COLA) for 2026 on the October 15, shortly after the Bureau of Labor Statistics releases its September inflation report at 8:30 a.m. ET.
Surveys conducted by The Motley Fool show most retirees found Social Security’s COLAs insufficient in 2024 and 2025, meaning the additional income did not completely offset rising prices. The same outcome is likely next year due to a significant increase in Medicare Part B premiums and tariffs imposed by President Trump.
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Here’s the best-case and worst-case scenario for 2026 COLA.
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Social Security benefits will increase in January
Annual cost-of-living adjustments are designed to protect the purchasing power of Social Security benefits from inflation. You can think of COLAs as yearly pay increases tied to a subset of the Consumer Price Index known as the CPI-W. That metric tracks how prices change across over 200 items weighted based on spending habits of hourly workers. The math is explained below:
- The CPI-W from the third quarter of the current year (i.e., July through September) is divided by the CPI-W from the third quarter of the previous year. The percent increase becomes the COLA in the next year. Benefits do not change if the CPI-W decreases.
- To determine your new benefit, the Social Security Administration multiplies the percent increase in the CPI-W by your current benefit (including any Medicare premiums that were automatically deducted) and rounds the payment down to the next lowest dime.
The Social Security Administration will mail COLA notices in December. They will explain your updated benefit, any deductions like Medicare premiums and tax withholdings, and your net payment amount. Alternatively, you can view your updated benefit through the my Social Security portal. The pay increase takes effect in January.
Social Security’s 2026 COLA will likely land between 2.4% and 3%
The Social Security Board of Trustees in a report published earlier this year outlined three possibilities for the 2026 COLA: The high estimate says benefits will increase 3%, the low estimate says 2.4%, and the middle estimate says 2.7%. Here’s what those figures mean for different beneficiaries:
- Retired workers: The average retired-worker benefit was $2,008 in August. The forecasts above imply additional monthly income of $48 to $60 in 2026. The middle estimate implies an additional $54 per month or $648 for the full year.
- Spouses: The average spousal benefit was $955 in August. The forecasts above imply additional monthly income of $23 to $29 in 2026. The middle estimate implies an additional $26 per month or $312 for the full year.
- Survivors: The average survivors benefit was $1,575 in August. The forecasts above imply additional monthly income of $38 to $47 in 2026. The middle estimate implies an additional $43 per month or $516 for the full year.
- Disabled workers: The average disable-worker benefit was $1,583 in August. The forecasts above imply additional monthly income of $38 to $47 in 2026. The middle estimate implies an additional $43 per month or $516 for the full year.
Importantly, Medicare Part B premiums are usually deducted from Social Security benefits and the standard premium is forecast to increase $21.50 to $206.50 per month next year, according to the Medicare Board of Trustees. That would be the largest increase in nominal dollars since 2022, and more than double the $10.30 increase in 2025.
Unfortunately, retired workers may once again feel like their cost-of-living adjustment was insufficient next year. Not only because Medicare Part B premium are expected to increase significantly, but also because many economists expect inflation to worsen in the months ahead as companies pass along a larger percentage of President Trump’s tariffs.
Indeed, BNP Paribas economists estimate U.S. companies have absorbed about 64% of tariffs to date, while foreign exporters have shouldered 20% and U.S. consumers have paid 17%. But those economists expect companies to pass along 63% of the cost increases in the coming months, which could have a material impact on inflation.
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