The Social Security 2026 COLA Forecast Was Just Updated. There's Good News and Bad News for Retirees.

A recent Gallup poll found that Americans are increasingly worried about the economy, inflation, and Social Security. Those three issues ranked among participants' five greatest concerns, and the percentage of people that "worry a great deal" about Social Security benefits reached a 15-year high.

Those topics intersect in Social Security's cost-of-living adjustments (COLAs), annual pay increases that help beneficiaries keep up with rising prices across the economy. The Social Security Administration will announce the official 2026 COLA this October, and retired workers are probably hoping for a big raise.

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On that note, the lastest 2026 COLA forecast comes with good news and bad news. The good news is the forecast trended higher, meaning Social Security benefits could increase more than originally expected next year. The bad news is retirees may still feel as if the pay raise is too small.

Read on to learn more.

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The good news: Social Security benefits are now on pace to get a 2.5% COLA in 2026

The Senior Citizens League (TSCL) is a nonprofit advocacy group focused on Medicare and Social Security policies. Its forecast in January said Social Security benefits would receive a 2.1% cost-of-living adjustment (COLA) in 2026, but TSCL has since revised that figure higher. Here are the forecasts the group published each month this year:

• January: 2.1%
• February: 2.3%
• March: 2.2%
• April: 2.3%
• May: 2.4%
• June: 2.5%

Readers may wonder why the forecast has been revised higher so many times. Inflation is moderating less quickly than TSCL originally expected. In fact, inflation as measured by the Consumer Price Index (CPI) actually increased in May after slowing in the three preceding months.

A larger COLA means a bigger pay increase for Social Security recipients. For instance, the average retired-worker benefit was $2,002 in May 2025. The 2.5% COLA forecast by TSCL would bring that figure to $2,052, meaning the average retiree would get an extra $50 per month, or $600 for the full year, in 2026.

Alternatively, the 2.1% COLA originally forecast by TSCL would bring that average benefit to $2,044 next year. In that scenario, the average retired worker would receive an extra $42 per month, or $504 for the full year, in 2026. So the good news for retired workers on Social Security is the latest COLA forecast implies a larger pay increase next year.

The bad news: Social Security's 2026 may not be large enough for many retirees

Measuring inflation is an inexact science because the extent to which rising prices impact someone depends on how they spend money. For instance, someone who does not attend school (nor pay tuition for anyone else) would not be affected by rising education costs. But higher education costs would greatly affect a college student.

Social Security's COLAs are based on a subset of the CPI known as the CPI-W. It measures inflation using the spending habits of working-age adults, but they spend money differently than seniors on Social Security. Most notably, seniors spend more on housing and medical care, which means they are more sensitive to inflation in those categories.

Unfortunately, inflation in those spending categories is running above average this year. To elaborate, overall CPI-W inflation measured 2.2% in May, but inflation within the categories of medical care and housing was 2.5% and 3.9%, respectively. Retired workers spend more money on those things, so the CPI-W is likely to understate inflation from their perspective.

Here's the bottom line: TSCL recently raised its 2026 COLA forecast to 2.5%, which on the surface seems to be good news for retired workers on Social Security. However, underlying trends in the inflation data -- namely, housing and medical care costs are increasing faster than the overall CPI-W -- suggest a 2.5% pay increase in 2026 would be too small for many retirees. That's the bad news.

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