The Social Security Board of Trustees Just Updated Its 2026 Cost-of-Living Adjustment (COLA) Forecast. Here's How Much Your Benefits Could Increase.

One of the most important pieces of Social Security retirement benefits is the annual cost-of-living adjustment, or COLA

Without the COLA, many seniors would face significant shortfalls in their retirement budgets as prices for housing, healthcare, and groceries increase over time

Over the last few years, as inflation has reared its ugly head, many retirees have come to rely more and more on the annual COLA

While we're still months away from the official announcement for next year's COLA, multiple analysts have published their best estimate for what kind of pay bump retirees could receive next year

The Social Security Board of Trustees, the people in charge of the trust fund and who report on the financial of the gram to Congress, have their own estimate they publish once per year

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When will we know next year's official COLA

The annual COLA figure is released around the same time every year in the second week of October

That's because the COLA is based on data collected over the summer between July and September

Specifically, it's based on the year-over-year increase in a measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W

Every month, the Bureau of Labor Statistics surveys thousands of prices around the country for everything from apples to water bills

To calculate the CPI-W, each price is weighted by its relative portion of a standard budget for a working-age city dweller

The results are usually compiled and published by the second week of the ing month

The Social Security COLA is based on the average year-over-year increase in the CPI-W during the third quarter of the year, which ends in September

When the September CPI-W number gets published in October, the Social Security Administration is able to announce the COLA that will go into effect for benefits payments that begin the ing January

There's a high-cost, low-cost, and intermediate estimate

These are based on the net cost of each scenario to Social Security based on both outflows (benefits payments) and inflows (tax revenue)

The high-cost estimate is actually the case where the COLA is lowest

While Social Security will pay out less in benefits in that case, low inflation will also curb how much wages rise and in turn how much Social Security will collect in revenue

And since there are more workers paying into Social Security than retirees collecting benefits, a super low inflation environment can be bad for the overall health of Social Security

The board its COLA estimates each year along with its full outlook for Social Security and if and when the gram will deplete its trust fund

It's worth pointing out that many analysts, not just the trustees, expected inflation to fall faster than it has since last year

The Federal Reserve has tried to tame inflation by keeping rates higher for longer

On top of that, there's a growing amount of uncertainty driven by the Trump administration's constantly changing trade policies and conflicts in Europe and the Middle East

As such, there's a good chance we see a pickup in inflation this summer, pushing the COLA higher

That said, the trustees' intermediate estimate for the 2025 COLA was 2. 6%, but retirees only up with a 2

So, it's possible the trustees are overestimating how much prices will increase this summer

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