For Immediate Release:
December 11, 2024
Initial Prediction for 2026 COLA: 2.5%
The Senior Citizen’s League (TSCL) predicts that the 2026 COLA will come in at 2.5%, based on the latest Bureau of Labor Statistics data. This figure would be equal to 2025’s COLA, signaling modest inflation in the year to come. TSCL will update this prediction every month until the Social Security Administration announces the 2026 COLA in October 2025. In 2024, TSCL’s model predicted that inflation, and therefore the COLA, would drop as early as Q2.
The Consumer Price Index for Urban Wage Earners (CPI-W), the government's inflation index to calculate COLAs, came in at 2.6% for November, the second month of Q4. Today’s release continues a recent trend of falling inflation, as the CPI-W averaged 3.2% yearly inflation in Q1 and Q2 2024 before falling to an average of 2.5% in Q3, the quarter used to calculate Social Security COLAs.
Key Insights:
- Inflation is returning to pre-pandemic levels: While the incoming Trump Administration made combatting inflation a central part of its campaign, the fight may already be nearing its end. After reaching a peak of 9.3% in Q2 of 2022, inflation, as measured by the CPI-W, has steadily declined. If the CPI-W does not increase dramatically this month, Q3 and Q4 2024 will be the first consecutive quarters since the start of 2021 with inflation below 3%.
- The TSCL COLA model expects inflation to remain relatively low in 2025, yielding a similar COLA to this year’s 2.5%. Our model incorporates the CPI-W, Federal Reserve interest rates, and the unemployment rate into its predictions, which TSCL updates every month. The model is accurate to about 0.01% on test data.
- Seniors still feel left behind. In a TSCL survey of 3,249 American seniors conducted this fall, 69% of respondents said they worry persistent high prices from inflation will drive up their spending and cause them to deplete their retirement savings and other assets.
- Seniors are worried about benefit cuts. In the same survey (which had similar percentages of Democrat-leaning, Republican-leaning, and independent voters), 74% of seniors worried that Congress or the President would enact new laws or rules that cut their Social Security benefits. Nearly as many, 70%, worried about cuts to Medicare benefits.
- The incoming administration can reassure seniors by increasing the program’s funding in its tax plan. When asked what the federal government should prioritize when addressing Social Security’s finances over the next two years, 81 percent agreed that Congress should increase taxes to address Social Security’s finances. The proposal they were most likely to support was raising or eliminating the limit on income subject to Social Security’s payroll tax ($176,100 in 2025).
TSCL Executive Director Shannon Benton Says:
- “While it’s great to see inflation cooling, that doesn’t mean seniors’ economic challenges are over. Years of inadequate COLAs have left older Americans behind, and TSCL will continue fighting until Social Security offers a guaranteed minimum COLA of 3%.
- “If the Trump administration wants a quick win with seniors, the best place to start is not just protecting Social Security but reforming it. Seniors want to see stronger COLAs that better represent their experience of inflation. They also demand financial reforms to ensure the program lasts not just through the end of their retirements, but their grandchildren’s.
About the TSCL COLA Model:
Each month, TSCL issues a new prediction of the next COLA for Social Security using our statistical model. Our model incorporates the Consumer Price Index, the Federal Reserve interest rate, and the national unemployment rate to make its predictions. The model’s predictions update throughout the year, adjusting in response to economic conditions. For additional information about the model, contact Alex Moore, TSCL’s statistician, at amoore@tsclhq.org.
About TSCL:
The Senior Citizen’s League (TSCL) is one of the nation’s largest nonpartisan seniors’ groups. Established in 1992 as a special project of The Retired Enlisted Association, our mission is to promote and assist our members and supporters, educate and alert senior citizens about their rights and freedoms as U.S. citizens, and protect and defend the benefits seniors have earned and paid for. TSCL consists of vocally active senior citizens concerned about protecting their Social Security, Medicare, and veteran or military retiree benefits. To learn more, visit https://seniorsleague.org/about-us/.
