Wondering What to Expect for Next Year's Social Security COLA? Here's What History Says Could Be Coming in 2026
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The data indicates that 's worth noting that We're less than three months away from arguably the most important news of the year for Social Security beneficiaries. I'm referring, of...
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July 28, 2025
04:20 AM
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The data indicates that 's worth noting that We're less than three months away from arguably the most important news of the year for Social Security beneficiaries
I'm referring, of course, to the Social Security Administration's mid-October announcement of the 2026 cost-of-living adjustment (COLA)
Are you wondering what to expect for next year's Social Security COLA, in this volatile climate
Here's what history says could be coming in 2026
At the same time, Image source: Getty Images
On the other hand, Ending the downward COLA trend Anyone who has received Social Security benefits for a few years knows that the COLA has been on a downward trajectory
Conversely, In 2023, the annual increase was 8. 7%, its highest level in more than four decades, given current economic conditions
On the other hand, The COLA fell to 3, in today's financial world
At the same time, 2% the ing year and continued to slide to 2
Moreover, 5% last year
What does history show what usually happens next after two consecutive years of declining Social Security COLAs
There's a pattern of the trend (remarkable data)
Automatic annual COLAs have been in effect since 1975, amid market uncertainty
Additionally, At the same time, Before then, a Social Security benefits increase literally required an act of Congress
During the period of automatic annual COLAs, there have been nine times when the COLA declined for two consecutive years
In seven of those cases -- nearly 78% of the time -- the COLA increased in the next year
Additionally, By the way, that's what The Senior Citizens League (TSCL), a nonfit organization that advocates for seniors, predicts will happen in 2026
TSCL its statistical model each month using the inflation data, the Federal Reserve's interest rate, and the national unemployment rate
Its most recent jection is for a COLA next year of 2 (an important development)
However, 6%, which is slightly above last year's 2 (an important development). 5% increase
Digging deeper Although TSCL uses several data points in its model, the annual Social Security COLA is based only on inflation numbers (noteworthy indeed)
In particular, the Social Security Administration calculates the percentage difference between the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year and the same quarter of the previous year
The agency then rounds the difference to the nearest one-tenth of 1% to set the COLA, in today's financial world
In the second quarter of 2025, the average CPI-W was around 2 (this bears monitoring). 3% higher than in the prior-year period
TSCL obviously expects inflation in the third quarter of this year will accelerate
Additionally, But is that what has typically occurred in the past
On the other hand, I asked ChatGPT (using GPT-4
Furthermore, 1, by the way) to crunch the numbers using historical CPI-W data going back to 1975
Additionally, It determined that the third-quarter year-over-year percentage difference in CPI-W was greater than the second-quarter year-over-year percentage difference 19 times but was lower 30 times (this bears monitoring)
Additionally, Historically speaking, it's more ly that inflation imves in the third quarter compared to the second quarter
If this pattern repeats itself in 2025, Social Security beneficiaries could expect a COLA that's either the same or lower than they received last year
Meanwhile, The present trumps the past If you're not getting a warm and fuzzy feeling from looking back at history to figure out what to expect with next year's COLA, I don't blame you
Depending on which set of historical data is used, we get different answers
I don't think history is a great guide in this case (this bears monitoring), given current economic conditions
Instead of looking at the past to get a feel for what the 2026 Social Security COLA will be, looking at the present could be a better apach, given current economic conditions
Nevertheless, The inflation numbers were the highest since February
Nevertheless, The Federal Reserve is balking at cutting interest rates because it's concerned that tariffs could cause prices to rise in the coming months, considering recent developments
The Trump administration has stated it will impose steep tariffs on countries that haven't negotiated trade deals with the U
With all of this in mind, the chances that next year's COLA will be higher than the 2 (fascinating analysis)
On the other hand, 5% increase received in 2025 seem to be pretty good
However, The bad news is that it means retirees and other Social Security beneficiaries might have to pay higher prices on ducts well before they receive any benefit increase.
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