June 13, 2025 | Washington, D.C. — A new estimate suggests that Social Security beneficiaries may receive a 2.5% cost-of-living adjustment (COLA) in 2026, according to updated inflation data analyzed by independent policy expert Mary Johnson. The projection, released this week, reflects a slight increase from last month’s 2.4% forecast.
If the 2.5% COLA holds, it would match the adjustment received by Social Security recipients this year and could result in an average monthly benefit increase of approximately $40.70, based on May’s average payment of $1,948.17. More than 75 million Americans currently receive Social Security benefits.
Why Inflation—and Tariffs—Matter
Although May’s inflation data appeared relatively tame, economists warn that the full impact of President Donald Trump’s proposed tariff increases has yet to be felt in consumer prices. If the tariffs begin pushing inflation higher in the coming months, the 2026 COLA could rise further.
“This estimate may rise with four more months of data still to come before the COLA is finalized in October,” Johnson said.
Experts agree. “Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. Ken Kim, senior economist at KPMG, projects inflation could peak above 4% annually by the fall—potentially pushing up the final COLA number.
What Is COLA and How Is It Calculated?
The cost-of-living adjustment is an annual increase applied to Social Security and Supplemental Security Income (SSI) benefits to ensure they keep pace with inflation. COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter—July through September—of each year. If inflation rises during that period, so does the COLA.
In May, the CPI-W increased by 2.2% year-over-year, slightly below the 2.4% rise in the broader Consumer Price Index (CPI).
When Will the 2026 COLA Be Announced?
The official 2026 COLA will be announced by the Social Security Administration in October 2025, once the third-quarter CPI-W data is complete. Beneficiaries will begin receiving the adjusted payments in January 2026.
While the projected 2.5% COLA for 2026 is modest, it reflects ongoing inflation pressure and the possibility of rising prices due to new tariffs. With four months of critical economic data still to come, millions of Americans will be watching closely for any changes that could affect next year’s Social Security payments.