The Social Security cost-of-living adjustment — commonly referred to as the COLA — for 2026 is now projected to be 2.5%, according to updated forecasts from The Senior Citizens League, or TSCL, and independent Social Security analyst Mary Johnson.
The adjustment comes amid signs that inflation, while moderating from the highs of 2022, remains persistent enough to impact older adults’ purchasing power — particularly as new tariffs begin to influence consumer prices.
The updated COLA forecast is based on the latest data from the Bureau of Labor Statistics, which showed that the consumer price index for all urban consumers, or CPI-U, increased 0.1% in May. Year over year, prices have risen 2.4%, driven primarily by increases in shelter and food costs.
Meanwhile, the CPI for urban wage earners and clerical workers, or CPI-W — the index used to calculate COLA — increased by 2.2% compared to a year ago.
Johnson, a retired policy analyst specializing in Social Security and Medicare, emphasized that the 2.5% estimate for next year’s COLA is a preliminary figure that could change.
“This estimate may rise with the four more months of data still to come in before the 2026 COLA will be announced in October,” she said in a note.
She added that tariffs enacted by the Trump administration are beginning to exert upward pressure on prices, although the full effects remain uncertain.
“There are signs that the pullback in higher prices appears to be reversing,” Johnson wrote, pointing to stubbornly high costs in categories that disproportionately affect retirees, such as housing, food — particularly meat — and automotive repairs.
Inflation-tracking issues could distort 2026 COLA projections
According to a recent TSCL news release, the BLS is struggling with staffing shortages due to a federal hiring freeze, which has forced the agency to scale back its data collection efforts. Shannon Benton, TSCL’s executive director, raised concerns about how this could affect Social Security recipients.
“While streamlining the federal government is a good thing, that shouldn’t involve cutting back on our ability to measure how our economy is changing,” she said. “Inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that’s lower than actual inflation, which can cost seniors thousands of dollars over the course of their retirement.”
TSCL’s 2025 Senior Survey, which is due out this week, found that 80% of seniors believed inflation in 2024 was over 3% — significantly higher than the actual COLA of 2.5% for that year. In reality, the CPI from December 2023 to December 2024 showed an increase of 2.9%.
This perceived mismatch is fueling distrust among retirees who already feel squeezed by rising costs and stagnant benefit growth.
“Seniors should be concerned as inflation continues to tick upward,” Benton said. “TSCL’s research shows that there’s a serious disconnect between the inflation the government reports and the inflation that seniors experience every day. If the government tells us that prices are rising faster, it’s likely that seniors are already feeling the crunch.”
More from Money:
Why Some Social Security Recipients Won’t Get Payments in June
White House Plans to Eliminate Social Security Payments by Paper Check
9 States That Still Tax Social Security Benefits
According to a report from Money.com, the Senior Citizens League (TSCL) and independent Social Security analyst Mary Johnson have updated their forecast for the Social Security cost-of-living adjustment (COLA) for 2026. The new projection is 2.5%, which is based on the latest data from the Bureau of Labor Statistics (BLS). This comes as inflation remains persistent and could impact the purchasing power of older adults, especially with the recent implementation of new tariffs.
The COLA is calculated using the consumer price index for all urban consumers (CPI-U) and the consumer price index for urban wage earners and clerical workers (CPI-W). The CPI-U increased by 0.1% in May and has risen 2.4% year over year, driven by increases in shelter and food costs. The CPI-W, which is used to calculate the COLA, increased by 2.2% compared to last year.
Johnson, a retired policy analyst, notes that the 2.5% estimate is preliminary and could change as more data becomes available. She also points out that the recent tariffs implemented by the Trump administration could further impact prices, particularly in categories that affect retirees, such as housing, food, and automotive repairs.
However, TSCL warns that the accuracy of future COLA estimates may be compromised due to staffing shortages at the BLS caused by a federal hiring freeze. This could result in inaccurate or unreliable data, leading to a lower COLA for seniors. TSCL’s 2025 Senior Survey found that 80% of seniors believe inflation in 2024 will be over 3%, which is significantly higher than the current projection.
TSCL’s executive director, Shannon Benton, expressed concerns about the potential impact on seniors, stating that “inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that’s lower than actual inflation, which can cost seniors thousands of dollars over the course of their retirement.”
The updated COLA forecast from TSCL and Mary Johnson is the fourth consecutive monthly increase. However, with potential issues in the way inflation data is collected, the accuracy of future projections may be distorted. This highlights the importance of accurately measuring inflation to ensure that seniors receive a fair COLA that reflects the true cost of living.
Source:Read More