An early forecast for Social Security for the upcoming yearAccording to the Cost of Living Adjustment, retirees may be taken by surprise.
The nonpartisan advocacy organizationBased on information from the Bureau of Labor Statistics’ CPI-W, which is the index used to determine the yearly increase, the Senior Citizens League projects that the COLA will be 2.1% in 2026. The CPI-W for December was 2.8%.
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According to the most recent forecast, falling inflation may result in the lowest COLA since the COVID-19 pandemic began. The COLA for 2025 was a sharp decline from the 8.7% beneficiaries received in 2023 and a 2.5% decrease from 3.2% in 2024. COLA was 1.3% in 2021, the last time it was less than 2.0%.
Although preliminary, the predictions point to a significant issue for senior citizens, according to TSCL Executive Director Shannon Benton.
Seniors are not catching up just because inflation is slowing down. Congress must move swiftly to address years of poor COLAs and assist in providing seniors with the standard of living they are entitled to, Benton stated. There would be a significant impact from the Trump Administration’s proposal to remove taxes on Social Security payouts. We have never made adjustments for inflation to the present thresholds that determine whether you would pay taxes on your benefits, which were established back in the 1980s.
67% of seniors rely on Social Security for more than half of their income, according to TSCL survey data. While slower inflation is a desirable thing, it does not mean that prices will decrease; rather, they will climb more slowly.
Many seniors are left with a fiscal deficit as a result. Sixty-two percent of older Americans are concerned that their retirement income won’t even cover necessities like groceries and medical bills, according to data from TSCL’s 2024 Senior Survey, the company stated.
Data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, which monitors the average cost of a basket of items, is used to calculate COLAs, which are intended to keep benefits from being diminished by inflation. The COLA is calculated as the difference between the average CPI-W for the third quarter (July, August, and September) of the prior year and the same period of the current year.
