Social Security COLA Update as New Prediction Announced

The Senior Citizens League (TSCL), a nonpartisan seniors group, has predicted a 2.3 percent cost-of-living adjustment (COLA) for 2026.

This prediction is lower than the 3.0 percent yearly change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as announced by the Bureau of Labor Statistics.

Why It Matters

The forecasted 2026 COLA of 2.3 percent reflects ongoing concerns about the sufficiency of Social Security adjustments in relation to rising living costs.

This underwhelming projection is crucial for approximately 68 million Americans who rely on these benefits to keep pace with inflation.

What To Know

If TSCL’s prediction is accurate, the 2026 COLA would be 0.2 percentage points lower than 2025’s 2.5 percent adjustment. This assumes that inflation will decrease throughout the year.

The TSCL’s updated COLA model, which predicts these adjustments, incorporates several economic indicators including the Consumer Price Index (CPI), Federal Reserve interest rates and the national unemployment rate.

Adjustments to the model in January aimed to improve the accuracy of its predictions by processing data according to the federal fiscal year instead of the calendar year, as well as decreasing the model’s dependence on previous forecasts.

Mary Johnson, an independent Social Security and Medicare policy analyst, told Newsweek, she’s forecasting a 2.1 percent increase based on January inflation and the average inflation rate over the past 12 months. However, she noted it’s “still early” and that could change.

Johnson noted her forecast varies a bit from TSCL’s due to slightly different estimation techniques, yet their final predictions last year aligned before the 2025 COLA was announced in October.

Concerns remain about the adequacy of COLA adjustments and the ongoing financial challenges faced by seniors—especially those with lower incomes. TSCL and other advocacy groups have stressed the importance of legislative changes to ensure Social Security payments don’t lose further buying power, which has already declined significantly since 2010.

In legislative developments, Representative Thomas Massie, a Kentucky Republican, reintroduced a bill last week aimed at completely eliminating income taxes on Social Security benefits—a move first suggested in 2023 and inspired by a proposal from President Donald Trump while on the campaign trail.

The Senior Citizens Tax Elimination Act, if passed and implemented in 2025, is estimated to save the average senior household roughly $3,000 per year, per TSCL.

Shannon Benton, executive director of The Senior Citizens League, emphasized the potential benefits of such legislative changes, stating in a press release, “Eliminating taxes on Social Security benefits would be an excellent step to provide financial relief to American seniors, many of whom are struggling with a cost of living that is growing much faster than their incomes. It would also reduce double taxation, which is inherently unjust.”

What People Are Saying

Mary Johnson, an independent Social Security and Medicare policy analyst, told Newsweek: “When inflation increases faster than one’s COLA, we lose buying power. This can compound over time, leaving seniors at risk of having to spend down saving more quickly if they have any savings.

A large percentage of seniors may have to put unplanned costs such as for medical expenses on credit cards, and at today’s rates, it can be very difficult or even impossible to get that kind of debt paid off. That leaves older Americans at high risk of going without nutritious meals, or even homeless.”

Cliff Ambrose, founder and wealth manager at Apex Wealth, previously told Newsweek: “When inflation is high, everyday items like groceries, utilities, and health care become more expensive, so a larger COLA is needed to help retirees keep up with rising costs. However, when inflation slows down, prices stabilize, and retirees don’t need as large of an adjustment to maintain their purchasing power. So, while a lower COLA might mean a smaller increase in Social Security checks, it also means that retirees’ dollars should go further because prices aren’t rising as fast.”

Shannon Benton, executive director of The Senior Citizens League, said in a statement: “… We need to do even more for low-income seniors whose dignity depends on Social Security payments that have already lost 20 percent of their buying power over the last 15 years. Many lower-income seniors already do not make enough to pay taxes on their Social Security benefits, and the only way to help them is by reforming Social Security’s COLAs.”

What Happens Next

In October, the official COLA rate for 2026 will be revealed, offering a clearer view of the financial outlook for Social Security recipients for the upcoming year.

Meanwhile, the discussion on whether COLA adjustments are sufficient will persist as stakeholders like policymakers and senior advocacy groups evaluate their potential effects.