The Social Security cost-of-living adjustment (COLA) for 2026 is projected to rise by 2.7%, a slight increase from earlier estimates of 2.6% in June and 2.5% in May. This adjustment is intended to help Social Security benefits keep pace with inflation, responding to rising costs in various sectors. However, questions have emerged regarding whether the COLA accurately reflects the financial pressures faced by retirees.
According to a report by Newsweek, the increase is linked to persistent inflationary trends. This article will explore the method used to calculate the COLA, who benefits from it, and its potential effects on recipients.
Projected 2.7% COLA Boost for 2026
The Senior Citizens League (TSCL) recently updated their COLA forecast for 2026, estimating a 2.7% increase in Social Security benefits. This figure is higher than previous predictions of 2.5% for 2025, which took effect in January 2025. While a 2.7% boost is welcome news for many retirees, it’s important to note that it’s still a modest increase considering the rising prices of essentials like housing, medical care, and food.
The COLA is meant to help Social Security benefits keep pace with inflation, ensuring that retirees maintain purchasing power. However, the actual increase might not fully align with the inflation many seniors experience in their daily lives, especially given that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to calculate COLA, which may not reflect the specific costs seniors face.
This index tracks inflation based on the spending habits of younger, urban workers, rather than retirees, which can lead to discrepancies in how inflation impacts different groups.
How COLA Is Calculated: The CPI-W Connection
The Social Security Administration (SSA) determines the COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures inflation based on the spending habits of younger, urban workers, which means it may not always reflect the true inflation faced by seniors, who often spend more on healthcare and housing.
The COLA is applied each year using data from the CPI-W for the third quarter (July to September). The model used by TSCL shows that many seniors believe the COLA does not adequately reflect the inflation they face, particularly since the CPI-W might not capture the rising costs of healthcare and housing, which are major expenses for retirees.
If the 2.7% COLA estimate holds, millions of Americans who rely on Social Security benefits will see their monthly payments increase starting January 2026.
The Controversy Surrounding the 2026 COLA and Political Influence
While a 2.7% increase is positive news, it comes amid political concerns about the future of inflation reporting. The nomination of E.J. Antoni by President Donald Trump to head the Bureau of Labor Statistics (BLS) has raised alarm bells for some, as Antoni has previously argued that Social Security is financially unsustainable and should be phased out.
In a 2024 radio interview, he called the program a “Ponzi scheme” and warned that future retirees should not rely on Social Security benefits.
Antoni’s potential influence over the BLS, which produces crucial economic indicators including the CPI-W, has led to concerns that future inflation data may be manipulated for political purposes. If the inflation reports from the BLS are altered, it could affect the way COLA is calculated and ultimately reduce the payments made to Social Security beneficiaries.
The Senior Citizens League also noted that any changes to the CPI-W could leave retirees with reduced purchasing power, which would be especially detrimental to those who rely on Social Security as their primary source of income.
