Social Security's Current COLA Estimate Is 2.7%. Could it Still Climb Higher?

Key Points

• Social Security benefits are eligible for an automatic cost-of-living adjustment (COLA) each year.

• The current 2.7% estimate is missing a key piece of inflation data.

• It's possible that retirees will see a larger boost in 2026, but that could hurt them in other ways.

• The $23,760 Social Security bonus most retirees completely overlook ›

There are certain things about Social Security that seniors ought to be grateful for. One is the fact that they can sign up to start getting benefits at any time once they turn 62. Another is that Social Security benefits are eligible for an automatic cost-of-living adjustment (COLA) each year.

There are plenty of seniors who collect Social Security for decades. Without annual COLAs, those benefits would no doubt lose buying power, making life very difficult for the seniors who rely on them for income.

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Since we're getting closer to 2026, a lot of retirees are eager to know what next year's COLA will amount to. And while we're still a few weeks away from an official announcement, the Senior Citizens League, an advocacy group, is projecting a 2.7% raise based on the inflation readings it has to date.

That number is by no means set in stone, though. And it could still increase. But if it does go higher, that won't necessarily be something for seniors to celebrate.

Why a larger COLA isn't so great

Because Social Security COLAs are based on third quarter inflation data, it's too soon to make an official announcement about 2026's raise. That's because September's data can't be calculated until after the month ends.

If retirees end up with a 2.7% COLA in 2026, it'll be a larger raise than the 2.5% Social Security bump they got at the start of 2025. But many seniors would no doubt prefer that next year's COLA be larger than 2.7%.

If inflation ticks upward in September, that could very well happen. But that could also put seniors in a very tough financial position.

As it is, many seniors are having a hard time covering their bills. And a big reason is that many retirees don't have savings of their own and need to rely on Social Security to pay their expenses.

If inflation increases in September, it could leave retirees with a larger Social Security COLA in 2026. But it could also leave them paying more for gas, groceries, and just about any other essential expense that eats into their budget. That's hardly a win.

A break-even scenario is the best-care scenario

It's natural for seniors to want as large a Social Security raise as possible. But it's also important to recognize that a larger Social Security COLA probably won't result in more buying power.

Because those COLAs are also designed to match inflation, the best seniors can hope for is to break even. In other words, if there's a larger COLA, the best-case scenario is that it will be enough to compensate for higher living costs.

For this reason, it's so important to have retirement income outside of Social Security. That could come in the form of an IRA, a 401(k), a part-time job, or an investment portfolio.

Meanwhile, an official 2026 COLA update should come through on Oct. 15. But no matter what number gets announced that day, retirees on Social Security should keep their expectations in check.

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