COLA stands for Cost-of-Living Adjustment. It is the annual increase added to Social Security benefits to ensure people can keep up with inflation. Every year, the Social Security Administration (SSA) uses a government formula based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to decide how much to increase monthly payments.
COLA matters the most to retired people, disabled individuals, and low-income households who depend heavily on Social Security income. It helps them afford essentials like groceries, rent, transportation, and healthcare, especially during times of rising prices.
What’s the Forecast for 2026?
Early predictions suggest that the COLA for 2026 might be around 2.6 percent. This would be the lowest increase in several years. By comparison:
- The 2023 COLA was a historic 8.7 percent
- The 2024 COLA was 3.2 percent
- The 2025 COLA is expected to be near 3 percent
In contrast, the 2026 figure appears smaller due to cooling inflation. The official 2026 COLA will be announced by the SSA in October 2025.
Why is the COLA Projected to be Lower?
The main reason behind this lower projection is a drop in inflation. Over the past two years, inflation was high due to global supply chain issues, the Russia-Ukraine conflict, and post-pandemic economic recovery. But now, things have settled.
Here are the main reasons behind the expected drop:
- Consumer prices are stabilising
- Energy and fuel prices have fallen
- Food prices have shown moderate growth
- Interest rate hikes by the Federal Reserve have slowed down spending
Since the COLA is calculated based on inflation, lower price growth results in a smaller raise for beneficiaries.
Historical COLA Comparison
Here’s a look at COLA increases over the past few years:
| Year | COLA Increase |
|---|---|
| 2021 | 1.3% |
| 2022 | 5.9% |
| 2023 | 8.7% |
| 2024 | 3.2% |
| 2025 | ~3.0% (est.) |
| 2026 | ~2.6% (projected) |
As seen above, the 2023 COLA was exceptionally high, while the 2026 number might be one of the lowest in recent times.
Who Will Be Affected by the 2026 COLA?
The 2026 COLA will apply to:
- Social Security retirement beneficiaries
- Social Security Disability Insurance (SSDI) recipients
- Supplemental Security Income (SSI) beneficiaries
- Survivors receiving benefits from deceased family members
The adjustment will be applied automatically. You don’t need to apply or take any action to receive it.
When Will the COLA Be Announced?
- The official announcement is expected in October 2025
- The increased benefits will be paid starting January 2026
- For SSI beneficiaries, the updated payments will start from December 31, 2025
If you want to see your benefit estimate, you can check your Social Security account at ssa.gov/myaccount.
What Experts Are Saying
Experts from organisations like The Senior Citizens League have pointed out that while inflation is falling, seniors may still be under financial pressure. Housing costs, prescription drug prices, and long-term care expenses are still high and rising in many regions.
Mary Johnson, a well-known Social Security analyst, recently said, “A lower COLA doesn’t always mean life is getting cheaper. It simply means the inflation rate has slowed down. Many seniors will still struggle to keep up.”
Financial Impact on Retirees
For someone receiving $1,800 a month in Social Security, a 2.6 per cent COLA would increase their payment by just $46.80 per month. That may not be enough to cover rising rent, medical bills, or food costs in many cities.
This smaller raise could be especially hard on seniors living alone or depending entirely on Social Security to cover their living expenses.
How Seniors Can Prepare for a Lower COLA
Here are some ways seniors and low-income households can manage their finances in 2026:
- Create a monthly budget to track spending and cut unnecessary expenses
- Use local community programs that offer meal assistance, transportation, or utility support
- Check for Medicare Savings Programs that help pay premiums and copays
- Look into SNAP benefits for help with groceries
- Ask about senior discounts at pharmacies, stores, and public services
You can also call your local Area Agency on Aging to learn about additional state or local benefits available to you.
Conclusion
The 2026 Social Security COLA is expected to be much smaller than recent years due to lower inflation. While this shows some improvement in economic stability, many seniors and Social Security recipients may find it hard to meet rising costs with only a slight increase in their monthly benefits.
If you’re relying heavily on these payments, it’s a good idea to review your budget, explore available support programs, and stay informed about any policy changes that may affect your finances.