An early estimate for Social Security for the upcoming yearCost of Living Adjustments indicates that retirees can be caught off guard.
A neutral advocacy group called the Senior Citizens League projects a 2.1% COLA in 2026 using statistics from the Bureau of Labor Statistics’ CPI-W, which is the index used to determine annual increases. December saw a 2.8% increase in the CPI-W.
Slowing inflation is reflected in the most current prediction, which may lead to the lowest COLA since the start of the COVID-19 pandemic. In 2025, the COLA was 2.5%, which was much less than the 8.7% that beneficiaries received in 2023 and down from 3.2% in 2024. COLA was 1.3% in 2021, the last time it dropped below 2.0%.
Even though the forecasts are early, TSCL Executive Director Shannon Benton said they point to a significant issue for senior folks.
Inflation slowing down does not mean that older people are catching up. According to Benton, Congress must move swiftly to remedy years of poor COLAs and assist seniors in obtaining the standard of living they are entitled to. There would be a significant impact from the Trump administration’s proposal to remove taxes on Social Security payouts.
We have never accounted for inflation in the thresholds that currently decide whether you would pay taxes on your benefits, which were set in the 1980s.
67% of seniors depend on Social Security for more than half of their income, according to TSCL survey data. While reducing inflation is a good thing, it does not mean that prices will decrease; rather, they will climb more slowly.
Many seniors are left with a fiscal deficit as a result. Sixty-two percent of older Americans worry that their retirement income won’t be enough to pay for essentials like groceries and medical costs, according to data from TSCL’s 2024 Senior Survey.
Data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, which gauges the average cost of a basket of items, is used to compute COLAs, which are designed to prevent benefits from being diminished by inflation.
The average CPI-W for the third quarter of the prior year (July, August, and September) is compared to the same period in the current year; the difference is the COLA.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.