What to Expect from the Upcoming Social Security COLA (and How It’s Calculated)
Each autumn the Social Security Administration (SSA) announces a Cost-of-Living Adjustment (COLA) that will apply to Social Security benefits the following January. The COLA is intended to protect beneficiaries’ purchasing power by indexing benefits to inflation. For 2026, most estimates currently point to a modest increase in the mid-2% range — roughly 2.7% is a frequently quoted projection — but the official number will be announced in mid-October once September CPI-W data are released.
How the COLA is Calculated
The Social Security COLA is computed using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Under current law the SSA compares the average CPI-W for the third quarter (July, August, September) of the current year with the average CPI-W for the third quarter of the last year a COLA was applied; the percentage increase becomes the COLA. The Bureau of Labor Statistics (BLS) releases the September CPI-W in mid-October and SSA announces the COLA shortly thereafter; the COLA is effective with benefits payable in December and applied to January payments.
What the Market is Seeing for the Upcoming (2026) COLA
As of late September 2025, analysts and advocacy groups were projecting the 2026 COLA at roughly 2.5%–2.8%, with several recent estimates clustering around 2.7%. The SSA will announce the final COLA after the BLS publishes the September CPI-W; that announcement is scheduled for October 15, 2025. If you’re planning budgets or advising clients, treat current estimates as reasonable guidance but expect the official number only after the October data.
Short History and Context
Automatic COLAs began in 1975. The size of annual COLAs has varied dramatically — very large increases in the late 1970s and early 1980s (double-digit years such as 1980 and 1981) reflect the high inflation of that era, while recent years have seen much smaller adjustments (including two years of 0.0% in 2009 and 2010 during the Great Recession). Below I summarize long-run behavior and provide a chart.
Chart: Annual COLA Rates (1975–2024)
The chart below shows annual COLA percentages from 1975 through 2024.
What This Means for Beneficiaries and Advisors
A mid-2% COLA (the current consensus estimate) would slightly increase monthly checks, but for many households it may not completely offset higher costs for certain essentials. Beneficiaries who pay Medicare Part B premiums should remember that higher Medicare premiums can offset some or all of a COLA for many beneficiaries.
At Otium Financial Planners, we help clients understand how changes like the COLA affect their retirement income strategy. If you’d like to see how this adjustment impacts your specific plan, reach out to us today.