The cost-of-living adjustment (COLA) for Social Security in 2026 is being closely watched as inflation data continues to evolve. Recent projections indicate a potential adjustment of 2.5%, slightly higher than earlier estimates.
However, experts caution that this figure could change as new data becomes available in the coming months. According to a report by USA Today, the final COLA decision will be influenced by several economic factors, including ongoing inflation trends.
The official announcement is expected later this year, with a clearer picture emerging once more data is analyzed. The adjustment plays a critical role in maintaining beneficiaries’ purchasing power.
Factors Influencing the Cola Estimate
The cost-of-living adjustment (COLA) for Social Security could reach 2.5% in 2026, according to the latest inflation data.
This estimate represents a slight increase from the initial projection of 2.4%, as reported by Mary Johnson, an independent Social Security and Medicare policy analyst. A 2.5% increase would match the COLA beneficiaries received in 2025.
However, it is still possible for the estimate to change before the official 2026 COLA is announced in October, as four more months of data are still to come. As Johnson noted,
This estimate may rise with four more months of data still to come in before the 2026 COLA will be announced in October.
The primary factor influencing the COLA estimate is inflation. Despite relatively stable inflation data for May 2025, most economists expect the long-term effects of President Donald Trump’s tariffs to contribute to rising inflation, which could lead to a higher COLA.
While there has been little evidence of these tariffs affecting inflation so far, as Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, remarked,
Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains.
Given this, the 2.5% estimate could still rise, as the effects of tariffs continue to unfold. However, the full impact of these tariffs remains uncertain and is expected to be felt over time.
The Impact of Tariffs on Inflation
Economists predict that tariffs imposed by the previous administration will drive inflation higher in the coming months. This could lead to a higher COLA, with Ken Kim, senior economist at KPMG, forecasting inflation to peak above 4% annually in the fall of 2025.
This is sharply higher than the 2.4% increase in the May 2025 consumer price index, which tracks the average changes in the cost of goods and services. The potential for higher inflation could significantly impact the final COLA for 2026.
What Does This Mean for Social Security Beneficiaries?
For beneficiaries, a 2.5% COLA increase would mean a monthly benefit increase of approximately $40.70, based on the average Social Security check of $1,948.17 in May 2025.
This adjustment would help counteract the effects of inflation on purchasing power. Approximately 75 million Americans, or about 20% of the U.S. population, rely on Social Security benefits, making this increase significant for a large portion of the population.
How Is Cola Calculated?
The COLA is determined by the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July to September of the prior year compared to the same three months of the current year.
The CPI-W measures the overall inflation rate and influences the final COLA figure. In May 2025, the CPI-W rose by 2.2%, compared to a 2.4% increase in overall consumer prices.
