Upcoming Modification in Social Security Cost-of-Living Allowance (COLA): Estimated Boost for 2026
In 2025, senior Social Security recipients should have received their first checks with a 2.5% cost-of-living adjustment (COLA), bumping the average monthly benefit to $1,976. Despite this increase, retirees may still find it challenging to cope with escalating costs. Since 2010, Social Security's purchasing power has shrunk by 20%, according to the Senior Citizens League (TSCL)[1][2].
While the 2026 COLA remains unknown, there are early indications suggesting it will be modest. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which the Social Security Administration (SSA) uses to calculate COLAs, is showing signs of cooling inflation. This trend may lead to a lower 2026 COLA, as a smaller increase in the CPI-W could result in less of a benefit boost[1][3].
The TSCL currently anticipates the 2026 COLA will stand at about 2.1%, raising the average monthly check to approximately $2,017. However, this estimate may fluctuate as we approach October 2025, when the September CPI report will provide the final data point needed to calculate the COLA[1].
Amidst prevailing uncertainties, other Social Security developments also warrant attention. In January 2021, President Biden signed the Social Security Fairness Act, which would enhance benefits for around 2.8 million government employees and their families[1]. Furthermore, President Trump previously suggested eliminating Social Security benefit taxes, which could potentially lower U.S. households' taxes by $550[4]. But achieving such a reform would depend on securing sufficient Congressional support.
As we delve deeper into 2025, keep a close eye on developments in COLA and other Social Security-related matters to prepare your budget for the upcoming year.
During retirement, managing finances can be especially challenging due to the shrinking purchasing power of Social Security benefits. Despite receiving a 2.5% COLA increase in 2025, this may not be enough to counteract the rising costs, as indicated by the Senior Citizens League's data showing a 20% decrease in Social Security's purchasing power since 2010.
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