The Social Security increase for 2025 is just now taking effect, as retirees start seeing the extra money sometime this month. But it’s technically not too soon to start looking ahead to the bump for 2026.
The news isn’t good, though: The Senior Citizens League projects that the Social Security cost-of-living adjustment (COLA) for 2026 will be even smaller than it is for 2025: 2.1%. In fact, that would make it the smallest bump since 2021.
Smaller Social Security COLAs are the downside of lower inflation, though. The two are directly connected.
By law, Social Security COLAs are calculated based on inflation data. So, easing inflation translates to a smaller COLA, and rising prices translate to a bigger COLA.
The federal government will base the actual COLA for 2026 specifically on the average inflation rate during the third quarter of 2024 as compared with the same period in 2025. That means inflation data for every month from October 2024 through September 2025 will affect the 2026 COLA.
New inflation data released today shows that the annual inflation rate was 2.9% in December.
This rate has been edging up lately — from 2.7% in November, 2.6% in October and 2.4% in September, which was the lowest it had been since 2021.
Still, the current annual inflation rate of 2.9% is down sharply from the peak of 9.3% that we experienced in 2022.
At the same time, despite inflation being down sharply from its highs of a couple of years ago, consumers — especially those on fixed incomes — are still feeling the pinch.
The Senior Citizens League’s 2024 retirement survey found that nearly 80% of senior households saw their monthly budget for necessities like food, housing and medication increase over the prior 12 months, with 65% worried that their basic expenses could soon exceed their income.
Incidentally, the league advocates for a minimum Social Security COLA of 3%.
Currently, there is no minimum COLA. So, in years when there is no inflation, the COLA does not increase at all. In fact, the COLA has been 0% as recently as 2016.
Not that there is a maximum COLA, either. Since automatic annual COLAs were instituted in 1975, the Social Security COLA has been as high as 14.3%, which was the case in 1980.
COLAs have averaged about 2.6% over the past 20 years, according to the league.
To learn more about past COLAs, check out “Here’s the Social Security COLA the Year You Were Born.”
