You’re not alone if you were disappointed by Social Security’s 2025 cost-of-living adjustment (COLA). The 2.5% benefit increase added just $49 to the average monthly check while many retirees saw their expenses rise by more than this over the last year. That’s incredibly frustrating if you depend on your benefits for a significant chunk of your monthly income.

Eyes are already turning toward the 2026 COLA with the hope that it’ll bring some better news. We’re a long way off from knowing the actual number, but the latest projections suggest it might be larger than what experts had originally expected. Whether that’s a good or a bad thing depends on your perspective.

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The latest 2026 COLA projection ticked upward by 0.2%

The government calculates Social Security COLAs by looking at the difference in average third-quarter inflation data — data from July, August, and September — from the current year and the previous one. It uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate this.

The difference between the 2023 and 2024 third-quarter averages was 2.5% and that’s how we got the 2.5% COLA for 2025. The Social Security Administration will repeat the same process for 2026 once the September CPI-W figure comes in on Oct. 15, 2025.

There’s no way to know the official number before then, but The Senior Citizens League (TSCL), a nonpartisan senior group, does its best to estimate COLAs using a statistical model that takes factors like the CPI-W figures, the Federal Reserve interest rate, and the national unemployment rate into account. Every month it updates its predictions based on the latest data.

In January 2025, it projected an unimpressive 2.1% increase. But its February data bumped this up to 2.3%. That would boost the $1,979 average monthly benefit in January 2025 to $2,025 per month. There’s still time for this to change in either direction, but it’s worth noting that TSCL’s predictions regarding the 2025 COLA were accurate within 0.1% by April 2024.

Many equate a larger COLA with larger checks, so they see a bigger boost as a good thing. But the reality is more complicated.

When COLAs are up, so is inflation

The CPI-W used to set the COLAs is a measure of inflation. A substantial difference in CPI-W figures from one month to the next indicates that costs have risen significantly. So though you get a bigger COLA, that extra money is often completely eaten up by rising costs on everything from groceries to transportation.

In a perfect world, the COLAs and inflation would increase in lockstep so that your Social Security checks’ buying power remained constant. But that’s not what happens in reality. TSCL found that Social Security checks have actually lost 20% of their buying power since 2010 in spite of COLAs.

Many blame this on the government’s use of the CPI-W. It is a strange choice considering the CPI-W actively excludes retiree households from its data set. They’re tracked by a separate index, known as the Consumer Price Index for the Elderly (CPI-E).

Using the CPI-E instead of the CPI-W to calculate COLAs would have resulted in a larger COLA for seniors in seven of the last 10 years. This is because senior spending habits differ in some areas compared to the spending habits of younger, working adults. For example, retirees often spend more on healthcare as health problems tend to increase with age.

Some in Congress have proposed making the change to the CPI-E to help Social Security checks keep up with inflation. But so far, there hasn’t been any movement on this issue. However, it could happen as part of broader Social Security reforms designed to resolve the program’s $23 trillion funding shortfall.

For now, all we can do is wait and watch. As we get closer to October, the 2026 COLA should come into clearer focus. Once we know what it will be, it’ll be time to start planning your 2026 budget.

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