Social Security Cost-of-Living Adjustment Estimate Raised to 2.7 Percent for 2026

Inflation pressures lift the cost-of-living adjustment forecast for next year’s benefits.

Blank U.S. Treasury checks are run through a printer at the U.S. Treasury printing facility in Philadelphia on July 18, 2011. William Thomas Cain/Getty Images

The Social Security cost-of-living adjustment (COLA) for 2026 is projected to be 2.7 percent, according to an Aug. 12 estimate from The Senior Citizens League (TSCL), based on the latest inflation data.

The group’s updated projection is 0.2 percentage points higher than the 2.5 percent increase implemented at the start of 2025. Last month, TSCL’s model also pointed to rising inflation risks, part of several consecutive months of upward revisions.

TSCL said it will issue its final 2026 COLA forecast in September, ahead of the government’s official announcement in October. The group noted that its model accurately projected last year’s 2.5 percent COLA and, in 2024, correctly anticipated that inflation would drop below 3 percent by early in the second quarter.

“With the COLA announcement around the corner, seniors across America are holding their breath. While a higher COLA would be welcome because their monthly benefits will increase, many will be disappointed,“ TSCL Executive Director Shannon Benton said in a statement. ”TSCL’s research shows that many seniors believe the COLA does not adequately capture the inflation they experience.”

Benton cited a recent TSCL survey that highlights the difficulties many retirees face in addition to rising prices. It found that one in five older adults must travel at least 30 minutes to reach health care services and that more than half lack access to public transit, challenges the group links to lower life satisfaction and greater hardship.

Inflation Holds Steady

The updated COLA projection comes as U.S. annual inflation was unchanged in July, holding at 2.7 percent for the second month in a row, according to the Bureau of Labor Statistics. Core inflation, which excludes food and energy, rose to 3.1 percent from 2.9 percent in June, slightly above economists’ forecasts.

On a monthly basis, headline CPI increased by 0.2 percent, down from June’s 0.3 percent gain. Shelter costs were the primary driver, with rent of primary residence up 0.3 percent. Food prices were flat, and the energy index fell 1.1 percent.

The latest readings suggested minimal impact on consumer prices from the Trump administration’s recent tariffs, with new vehicle costs unchanged and apparel up 0.1 percent.

Despite the uptick in core inflation, analysts said the data are unlikely to deter the Federal Reserve from cutting interest rates next month, citing recent signs of labor market weakness.

“Inflation is on the rise, but it didn’t increase as much as some people feared,” Morgan Stanley Wealth Management’s chief economic strategist, Ellen Zentner, said in a statement. “In the short term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table.”

Tariffs and Inflation Outlook

Economists are divided on how the new trade measures will ultimately affect consumers. Goldman Sachs estimates Americans are currently absorbing about 22 percent of the costs from the tariffs but could bear roughly two-thirds by the end of the year if historical patterns repeat. That shift, the bank said, could push core inflation higher while easing the cost burden on businesses.

The White House disagreed with that view, arguing that foreign exporters and companies will continue to shoulder most of the costs.

Press secretary Karoline Leavitt said the latest CPI figures reinforce the administration’s stance that tariffs are not driving inflation, noting that inflation has averaged 1.9 percent since Trump took office. She pointed to falling energy prices and a 20 percent drop in egg prices since January as evidence that household staples remain affordable.

“Today’s CPI report revealed that inflation beat market expectations once again and remains stable, underscoring President Trump’s commitment to lower costs for American families and businesses,” Leavitt said in a statement. “The Panicans continue to be proven wrong by the data—President Trump’s tariffs are raking in billions of dollars, small business optimism is at a five-month high, and real wages are rising.”

Some analysts expect the tariff impact to be temporary. ING analysts predicted in a recent note that many prices in affected categories are likely to rise over time but described the current inflationary effect as “fairly benign” because companies are absorbing much of the costs. They contrasted present conditions—cooling rents, cheaper energy, and a softer labor market—with mid-2022, when price pressures were far more intense.