Social Security beneficiaries will see a 2.8% cost-of-living adjustment (COLA) in 2026 — an increase that adds about $56 a month on average to retirement benefits. 1
While the adjustment helps payments keep pace with inflation, it’s also renewing debate over how the annual COLA is calculated. Lawmakers are considering whether to replace the current CPI-W index, which tracks the spending of urban wage earners, with one that better reflects the spending patterns of older adults, such as higher medical and housing costs.
What is a COLA?
Legislation enacted in 1973 provides for cost-of-living adjustments, or COLAs. With COLAs, Social Security and Supplemental Security Income (SSI) benefits keep pace with inflation. 2
Experts note that changing the formula could slightly alter future adjustments, but it would also impact the program’s long-term finances. For now, the 2026 increase remains near the historical average for COLAs since 1975.
How is a COLA calculated?
According to the Social Security Administration: 2
TheSocial Security Actspecifies a formula for determining each COLA. According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics.
A COLA effective for December of the current year is equal to the percentage increase (if any) in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA for the year.
So what do you think?
Is it time for the Social Security Administration to find a new calculation?
Is the current process even fair?
Let us know.
1. https://www.ssa.gov/news/en/cola/factsheets/2026.html
2. https://www.ssa.gov/oact/cola/latestCOLA.html