Potential Threat to the 2026 Cost-of-Living Adjustment (COLA) for Social Security Due to This Factor
Seniors collecting Social Security benefits may face a potentially disappointing cost-of-living adjustment (COLA) in 2026, according to recent predictions. A lower COLA could be influenced by several factors related to incomplete or changing data from the Bureau of Labor Statistics (BLS), which calculates the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) — the index used to determine COLA adjustments.
Inflation, which has cooled compared to the high levels seen during the pandemic years, has already led to lower CPI-W increases earlier in the year. If this trend continues, it could depress the overall COLA in 2026. Other factors that could contribute to a smaller COLA include the impact of tariffs and trade policies, volatility in key cost components, and data revisions by the BLS.
The CPI-W, which differs from the CPI-U in the specific population it tracks, is used to help beneficiaries maintain their buying power from one year to the next. However, the accuracy of the CPI-W in representing the costs faced by Social Security beneficiaries is questioned by senior advocates, particularly if the index doesn't have a complete set of data.
In 2025, benefits received a 2.5% COLA. The Senior Citizens League has expressed concern that if the CPI-W continues to be the measure for calculating COLAs, it should at least have accurate data. If the CPI-W doesn't have a complete set of data, it could result in a smaller Social Security COLA than seniors should be entitled to in 2026.
With millions of older Americans today collecting Social Security, many retirees live only or mostly on these benefits. Seniors who rely on annual Social Security raises may have to brace for a potentially lower COLA in 2026, and may need to consider reducing spending, getting a part-time job, or both.
Lawmakers have not shown a strong inclination to change the way Social Security COLAs are calculated despite concerns raised by senior advocates. The Social Security Administration will announce the 2026 COLA in October.
The lower inflation, which has affected the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), could potentially lead to a smaller cost-of-living adjustment (COLA) for seniors' Social Security benefits in 2026. Furthermore, if the CPI-W does not have complete and accurate data, it could result in a less substantial COLA than what personal-finance planning may anticipate for retirees heavily reliant on Social Security.
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