The increase in Social Security for 2025 is currently being implemented, with retirees starting to see the extra money this month. However, it’s not too early to start looking ahead to the increase for 2026.
Unfortunately, the news isn’t good: The Senior Citizens League predicts that the Social Security cost-of-living adjustment (COLA) for 2026 will be even smaller than in 2025, at 2.1%. This would be the smallest increase since 2021.
Smaller Social Security COLAs are a result of lower inflation. The two are closely linked.
By law, Social Security COLAs are based on inflation data. Lower inflation means a smaller COLA, while higher prices result in a larger COLA.
The actual COLA for 2026 will be determined by the average inflation rate during the third quarter of 2024 compared to the same period in 2025. This means that inflation data from October 2024 to September 2025 will impact the 2026 COLA.
New inflation data released today shows that the annual inflation rate was 2.9% in December.
This rate has been increasing recently, from 2.7% in November, 2.6% in October, and 2.4% in September, the lowest since 2021.
Although the current annual inflation rate of 2.9% is significantly lower than the peak of 9.3% in 2022.
Despite inflation decreasing from previous highs, consumers, especially those on fixed incomes, are still feeling the impact.
According to the Senior Citizens League’s 2024 retirement survey, nearly 80% of senior households saw an increase in their monthly budget for necessities like food, housing, and medication over the past 12 months. 65% are concerned that their basic expenses might soon exceed their income.
The league advocates for a minimum Social Security COLA of 3%.
Currently, there is no minimum COLA. So, in years without inflation, the COLA remains the same. In fact, the COLA was 0% as recently as 2016.
There is also no maximum COLA. Since annual COLAs were introduced in 1975, the Social Security COLA has reached as high as 14.3% in 1980.
Over the past 20 years, COLAs have averaged about 2.6%, according to the league.
To find out more about past COLAs, check out “Here’s the Social Security COLA the Year You Were Born.”
