Social Security's 2026 Cost-of-Living Adjustment (COLA) Could Be Higher Than 2025's. But Retirees Shouldn't Want That

Maurie Backman, The Motley Fool

Sat, Mar 8, 2025, 3:09 AM 4 min read

When the Social Security Administration (SSA) announced past October that seniors would beryllium getting a 2.5% cost-of-living accommodation (COLA), a batch of older Americans weren't happy. The world is that, historically speaking, a 2.5% Social Security COLA isn't terrible. But successful the discourse of much caller COLAs, it's small.

At this point, though, seniors person been surviving with their 2.5% COLA for a mates of months. Now, retirees are looking up to 2026 and hoping for amended quality connected the COLA front.

So far, though, the numbers aren't looking that rosy. The nonpartisan Senior Citizens League precocious enactment retired a COLA estimation for 2026. Based connected ostentation readings to date, it's calling for a 2.3% summation to Social Security benefits successful the coming year.

That's intelligibly not large quality for radical who were already unhappy with a meager 2.5% raise. But that 2.3% projection is by nary means acceptable successful stone. There's a accidental that 2026's Social Security COLA could extremity up being acold much generous.

The Federal Reserve has been connected a ngo to chill inflation. To that end, it raised involvement rates astir a twelve times successful 2022 and 2023 earlier yet making a fewer complaint cuts toward the extremity of 2024.

But the Fed paused involvement rates astatine its past meeting, and is apt to bash the aforesaid erstwhile it meets again successful mid-March. The crushed is that ostentation has been stubbornly sticky.

That said, it's imaginable that ostentation volition commencement to ascent again successful 2025. The implementation and enforcement of tariffs could thrust the outgo of user goods upward and besides pb to cardinal merchandise shortages -- a premier look for inflation.

If ostentation levels emergence arsenic 2026 moves along, it could acceptable the signifier for a larger 2026 Social Security COLA. But that's besides not needfully a bully thing.

It's casual to look astatine a larger Social Security rise arsenic a bully thing. But due to the fact that COLAs are tied straight to inflation, it's important to admit that larger ones don't thin to bash seniors overmuch good.

Any clip there's a larger Social Security COLA, it's connected the heels of a agelong of rampant inflation. So seniors connected Social Security whitethorn beryllium amended served successful an situation of minimal ostentation and smaller boosts to their monthly checks.

We won't cognize what 2026's Social Security COLA looks similar officially until October rolls around. The crushed is that COLAs are specifically calculated based connected third-quarter ostentation readings. But it's not a atrocious thought for seniors connected Social Security to hole for either a smaller COLA, oregon a play of rising ostentation that could substance a larger COLA.