By John I. Adams, Chairman, TSCL
The Social Security Administration (SSA) announced that the 2026 Cost-of-Living Adjustment (COLA) will be 2.8 percent on October 24th. Social Security checks will increase on January 1st, with the average check for retired workers climbing $56 per month, from $2,008 to $2,064.
How was the 2026 COLA calculated?
The SSA calculated the COLA by taking the average of the Consumer Price Index for Urban Wage Earners for July, August, and September. The CPI-W is one of the government’s key measures of inflation. After briefly dropping to 2.1 percent this April, it increased by summertime. The CPI-W yearly change in July was 2.5 percent. In August, the rate was 2.8 percent, and in September it was 2.9 percent.
How does the 2026 compare to past COLAs?
The COLA in 2026 is 0.3 percentage points higher than last year’s COLA of 2.5 percent. It is far below the average COLA of 3.9 percent for the 2020s so far, but from a historic perspective it’s about average. Over the last 20 years, the COLA has averaged 2.6 percent.
How does the COLA compare to TSCL’s predictions?
Every month, TSCL releases a new prediction for the upcoming COLA using our statistical model, which is based on the CPI-W, Federal Reserve interest rates, and the unemployment rate. Back in January, the model expected inflation to cool throughout the year, predicting that the COLA would come in at 2.2 percent.
However, the model’s predictions ticked upward throughout the year as the Trump administration introduced sweeping economic changes, including aggressive tariff policies. By April, the month the administration first implemented a 10 percent baseline tariff on nearly all imports, our prediction had climbed to 2.4 percent. It reached 2.6 percent by July 2025, when President Trump signed the One Beautiful Bill into law, introducing a new $6,000 tax credit for seniors.
The model’s final prediction for the year, released in September, was 2.7 percent. That’s 0.1 percentage points from the 2026 COLA of 2.8 percent.
What could have changed to make the 2026 COLA higher?
I’m sure that, like me, many of you are disappointed with the 2.8percent COLA for 2026. It’s a difficult fact that COLAs simply haven’t kept up with inflation in the 2020s so far, especially with annual costs for Medicare Part B premiums often wiping out any gains.
What might be most disappointing of all is that a better method for calculating the COLA (one that actually takes seniors’ economic experiences into account) exists. It’s called the Consumer Price Index for the Elderly, which is another inflation measure compiled by the government that’s designed to reflect the budget of a senior household. If the 2026 COLA was calculated with the CPI-E, it would have come in at 3.0 percent, which is meaningfully higher than the current COLA calculated with the CPI-W—especially if we account for the effect of compounding COLAs over time.
At TSCL, we’ve spent years fighting to make the CPI-E the standard. We estimate that if the COLA were calculated with the CPI-E instead of the CPI-W, the average retiree would stand to bring in tens of thousands of dollars in additional income over the course of a typical retirement.
