Although no formal announcement has been made, the Social Security Administration (SSA) has provided a preview of what beneficiaries might expect from the cost-of-living adjustment (COLA) for 2026.
This annual adjustment is critical to ensuring that Social Security cheques retain their purchasing power in the face of rising inflation. While the formal announcement is coming in mid-October once third-quarter inflation data is evaluated, the agency has already released its forecasts for next year, providing a glimpse of what may be the best-case scenario for millions of retirees.
What would be the maximum COLA increase for 2026?
The SSA Trustees study states that a 3% COLA would be the best-case scenario for recipients in 2026. This prediction assumes increased inflation, which would enhance program income.
If this increase is implemented, the average retired worker, who presently earns around $2,000 per month, might see an increase of roughly $60 in their monthly check.
How is COLA calculated?
A price index is used: The government uses a measure of inflation called the Consumer Price Index for Wage Earners and Clerical Workers (CPI-W). This index tracks the prices of common goods and services, such as food, transportation and housing.
Three months are averaged: The Social Security Administration takes the values from the months of July, August and September of this year.
It is compared to the previous year: This average is then compared to the average for the same three months of the previous year.
The increase is determined: If this year’s average is higher than last year’s, the percentage difference becomes the COLA. If there is no increase or prices go down, there is no COLA for the following year.
