The latest forecast for social security’s 2026 cost-of-living adjustment (COLA) suggests that monthly benefits for retirees could rise between 2.4% and 2.7%, translating to an average increase of £38 to £43. This modest rise has sparked concerns that it may not be enough to keep pace with the real cost pressures facing retirees.
This adjustment, expected to be officially announced in October, is determined by inflation data, particularly the consumer price index for urban wage earners and clerical workers (CPI-W). For millions of beneficiaries, the size of this annual increase directly affects their ability to meet rising living costs.
How the 2026 COLA Is Calculated
The Social Security Administration (SSA) calculates COLA based on the CPI-W, which measures inflation using the spending habits of urban workers. According to the SSA, the CPI-W data from the third quarter of the current year is compared with the same period from the previous year, and the percentage change determines the following year’s COLA.
For example, because the CPI-W rose by 2.5% in the third quarter of 2024, benefits were increased by 2.5% in 2025. The same process will apply for 2026, with the Bureau of Labour statistics expected to release September’s CPI-W data on 15 October. The official COLA figure will then be published later the same day by the SSA.
According to The Senior Citizens League (TSCL), which monitors these trends, inflation has remained higher than anticipated, leading them to revise their 2026 COLA forecast upwards several times this year, currently standing at 2.6%. The Social Security Board of Trustees projects a 2.7% increase, while the congressional budget office estimates 2.4%. These figures would add roughly $48 to $54 per month for the average retired worker, but the real impact may depend on individual spending needs.
Why the COLA May Not Reflect Retirees’ True Costs
Although COLA adjustments are tied to CPI-W, many analysts argue that this measure fails to accurately reflect the financial realities of older Americans. According to TSCL, this is because retirees typically allocate a larger share of their income to housing and healthcare, categories that are rising faster than overall CPI-W inflation.
As of June, year-to-date inflation stood at 2.4% for CPI-W, 2.8% for medical care, and 3.9% for housing. These disparities suggest that while benefits will rise, they may not fully offset the increased costs in areas most critical to retirees.
If this pattern persists through the third quarter, millions of beneficiaries could see their purchasing power eroded for the third consecutive year, a trend that has already left many feeling that previous COLA increases have been insufficient. For now, all eyes are on the upcoming CPI-W data release, which will determine the exact size of the 2026 adjustment.
