The Good News and Bad News About the 2026 Social Security COLA
New predictions indicate the Social Security cost-of-living adjustment (COLA) for 2026 could be 2.5 percent. That’s higher than the previously predicted 2.4 percent increase in benefits. While this modest increase might seem like good news for the millions of Americans who receive Social Security benefits, there is reason to be wary.
According to a report by WATE News in Knoxville, Tennessee, analysts use figures from the Bureau of Labor Statistics (BLS) and its Consumer Price Index (CPI), which measures the change in prices for common consumer goods and services, to determine the COLA.
The problem is that the most recent BLS data might not be accurate due to hiring freezes and staffing shortages. The BLS acknowledges that it has stopped collecting data for its indexes in three cities and is reducing sampling areas across the country. This could result in “less accurate” CPI data. This would affect the Social Security COLA and could shortchange seniors when it comes to benefits, keeping up with inflation.
Words of Warning
According to the news report, senior advocates caution that “inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that’s lower than actual inflation, which can cost seniors thousands of dollars over the course of their retirement.”
The concern over the BLS data amplifies calls to change the way the Social Security COLA is calculated.
The Seniors Trust believes that it doesn’t make sense to base the Social Security COLA, which determines benefit amounts for retirees, on the spending habits of members of the workforce. We think the Consumer Price Index for Americans 62 years of age and older (CPI-E) would be a better formula. It more accurately reflects the costs incurred by older adults, especially related to healthcare and housing.
The Social Security Expansion Act calls for adopting the CPI-E. Not only would this provide Social Security recipients with a fairer COLA, but this landmark piece of legislation also provides an across-the-board benefits boost of about $2,400 per year and long-term Social Security solvency.
