Social Security’s 2026 COLA Projected to Hit Five-Year Low

Social Security’s 2026 COLA Projected to Hit Five-Year Low

If you’re counting on Social Security benefits for retirement income, we understand you might be concerned about the latest projections. The cost-of-living adjustment (COLA) for Social Security in 2026 is currently estimated to be 2.4%, which would be the lowest annual benefit increase in five years. This potential Social Security increase affects millions of beneficiaries who rely on these payments.

We know this news may feel disappointing, especially for seniors and others on fixed incomes who rely heavily on these benefits to make ends meet. However, it’s important to remember that these Social Security COLA projections could still change in the coming months as inflation rates fluctuate.

How This Affects Your Social Security Benefits

The projected 2.4% increase would be lower than the 2.5% boost beneficiaries received in 2025, and would mark the smallest adjustment since 2021, when Social Security benefits increased by just 1.3%.

For many of you who depend on Social Security—whether you’re retired, disabled, or receiving family benefits—even small changes in the COLA can make a meaningful difference in your:

• Daily living expenses
• Healthcare costs
• Overall financial security
• Ability to manage on a fixed income

Understanding How Social Security COLAs Are Calculated

The annual Social Security adjustment is based on comparing inflation data from the third quarter of the current year to the previous year. The Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which has increased by 2.1% over the past 12 months.

We recognize that these technical details might seem complicated, but they directly impact your benefits. If inflation doesn’t rise year-over-year, there might not be any increase at all, which can be particularly challenging for Social Security beneficiaries planning their retirement finances.

How Potential Tariffs Could Impact the 2026 Social Security COLA

While inflation recently reached its lowest rate since 2021 at 2.3%, there’s a possibility that tariffs could drive prices higher in the months ahead. If these taxes on imported goods take effect, they would likely increase consumer prices and overall inflation.

For those of you worried about your future Social Security benefits, this could actually result in a higher COLA for 2026. As Mary Johnson, an independent Social Security analyst, noted, “This year will be a closer year to watch because of the tariffs.” The official announcement typically comes in October.

Trump’s Executive Order on Prescription Drug Costs

In a development that may offer some relief to many seniors, President Trump recently issued an executive order addressing high prescription drug costs. The initiative aims to bring U.S. prices more in line with those in other countries and would apply to Medicare, Medicaid, and commercial markets.

While this policy likely won’t affect the Social Security COLA calculation directly, it could make a meaningful difference in your personal budget if drug prices decrease. For many retirees facing difficult choices between medications and other necessities, this could provide welcome relief.

The AARP has expressed support for efforts to reduce the burden of high prescription costs on retirees. As Leigh Purvis from AARP’s Public Policy Institute shared, “A lot of people are aware that prescription drug prices are too high, and I think a lot of people are aware that we’re paying a lot more than other countries.”

We understand these Social Security concerns can feel overwhelming, but we’ll continue to monitor these developments with your best interests in mind.