The highly anticipated day for over 70 million Social Security beneficiaries is fast approaching. Provided there is no delay in a crucial data release due to a government shutdown, the Social Security Administration is set to announce a series of updates for the coming year on October 15, with the most notable being the 2026 cost-of-living adjustment (COLA).
For those receiving retirement benefits—who made up more than 76% of all traditional Social Security recipients as of August—the income from this essential program is often crucial for their financial security. Nearly 25 years of Gallup surveys indicate that 80% to 90% of retirees rely on their monthly Social Security payments to help cover various expenses.
Although retired workers are less than two weeks away from learning their exact monthly benefit for 2026, it appears that the unfavorable lose-lose situation remains a real possibility.

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Why Social Security's cost-of-living adjustment matters for recipients
Before diving into the upcoming changes for beneficiaries, it's important to grasp the purpose behind Social Security's COLA.
Think of the cost-of-living adjustment as an almost yearly "raise" designed to help beneficiaries keep pace with inflation. For example, if the prices of goods and services commonly bought by Social Security recipients rise by 3% in a year, their benefits should also increase by 3% to maintain their purchasing power. The COLA is meant to reflect these inflation-driven price increases.
Before 1975, there was no standardized method for calculating annual COLAs. From the first payment in January 1940 until the end of 1974, only 11 cost-of-living increases were granted, each requiring special Congressional approval.
The routine annual COLAs we now expect began in 1975, when the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was adopted as the official measure of inflation for Social Security. The CPI-W is published monthly, making it easy to compare year-over-year price changes and determine whether inflation or deflation has occurred.
One unique aspect of Social Security's COLA is that only the CPI-W readings from July, August, and September—the third quarter—are used in the calculation. If the average CPI-W for these months is higher than the same period the previous year, beneficiaries receive a higher payment. Benefits can remain unchanged if prices are flat, but they are never reduced, even if prices fall during the measured period.
A significant increase in the U.S. money supply led to a spike in inflation and Social Security COLAs. US Inflation Rate data by YCharts.
Independent projections for the 2026 Social Security COLA have become more precise
According to independent forecasts, retirees, disabled workers, and survivors are all expected to see an increase in their monthly benefits next year.
After a decade of modest COLAs throughout the 2010s, the past four years have brought above-average increases. The rapid growth of the U.S. money supply during the early pandemic years triggered the highest inflation in 40 years, resulting in COLAs of 5.9% in 2022, 8.7% in 2023, 3.2% in 2024, and 2.5% in 2025. For context, the average COLA over the last 16 years has been 2.3%.
The positive news for Social Security recipients is that the 2026 COLA is on track to achieve something not seen in nearly three decades. For the first time since 1988–1997, the program is expected to deliver a raise of at least 2.5% for five consecutive years. In terms of dollar amounts, beneficiaries have experienced substantial increases in their payments over the past five years.
The Senior Citizens League (TSCL), a nonpartisan advocacy group for older adults, predicts next year's COLA will be 2.7%. Meanwhile, independent Social Security and Medicare policy expert Mary Johnson, who retired from TSCL last year, anticipates a slightly higher increase of 2.8% for 2026.
If either of these predictions proves correct, the average monthly benefit for retired workers would rise by about $54 to $56 in 2026. At the same time, the average disabled worker and survivor beneficiary would each see their monthly Social Security payments increase by roughly $43 to $44.

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Most retirees are likely to face the lose-lose situation in 2026
Despite projections indicating a fifth consecutive year of above-average COLAs, older beneficiaries are almost certain to find that the 2026 adjustment falls short in two key areas.
The first problem stems from the limitations of the CPI-W. While nearly annual COLAs are a significant improvement over the old system of arbitrary Congressional increases, the CPI-W itself has notable flaws.
As its name suggests, the CPI-W measures the expenses faced by "urban wage earners and clerical workers," who are generally working-age individuals not receiving Social Security. More importantly, these groups spend their money differently than seniors—adults 62 and older make up 87% of traditional Social Security beneficiaries.
Older Americans who are retired devote a larger share of their monthly spending to housing and healthcare than younger, working adults. The CPI-W does not sufficiently reflect the greater importance retirees place on these categories, and inflation for shelter and medical care has consistently outpaced the COLA increases given to beneficiaries.
According to two separate TSCL studies, the buying power of Social Security payments dropped by 36% from 2000 to 2023, and by 20% between 2010 and 2024. This trend of diminishing purchasing power is expected to persist into 2026.
Retirees who receive both Social Security and traditional Medicare are also expected to be negatively affected next year.
Those enrolled in both programs typically have their Medicare Part B premiums automatically deducted from their monthly Social Security payments. Part B covers outpatient medical services.
In both 2023 and 2024, the Part B premium increased by 5.9% each year. However, the latest Medicare Trustees Report, released in June, projects that the Part B premium will jump 11.5% to $206.20 per month next year. This significant increase will likely offset much or all of the benefit from the upcoming Social Security COLA for most people enrolled in both programs.
Even if the 2026 COLA exceeds the forecasts from TSCL and Johnson, it will not be enough to lift retirees out of this lose-lose predicament in 2026.