MW Social Security's COLA could be lowest since 2021, pressuring seniors' budgets

By Jessica Hall

The 2026 Social Security cost-of-living-adjustment is projected to be 2.4%

Social Security's cost-of-living adjustment for 2026 is expected to be below this year's level, which would make it the lowest since 2021 and put pressure on older adults' budgets as U.S. consumer prices rose modestly last month.

The Senior Citizens League, an advocacy group for older people, and Mary Johnson, an independent Social Security and Medicare analyst, both expect the 2026 COLA to be 2.4%.

The forecasts are higher than their previous projections, as the consumer-price index increased 0.2% last month after dipping by 0.1% in March, the Labor Department's Bureau of Labor Statistics said Tuesday.

Read: Consumer inflation shows mild rise. Yet trade wars seen lifting prices despite reduced tariffs.

Still, the new forecast is below the 2025 COLA of 2.5% and the average COLA over the past 20 years of 2.6%. It would be the lowest since 2021, when the increase was 1.3%. COLA is not a raise, but rather a benefit adjustment to keep pace with inflation.

The official announcement of the 2026 COLA is due in October and will be based on the CPI for July, August and September, so these forecasts are preliminary.

"If our predictions come true and the 2026 COLA comes in at the lowest we've seen since 2021, seniors will face additional pressure at a time when they're already strained financially," said Shannon Benton, executive director of the Senior Citizens League. "Our research shows that 73% of American seniors rely on Social Security for at least half their income, with 39% depending on the program for all of their income."

The average Social Security retirement benefit was $1,999.97 as of April 2025.

The COLA forecasts come as the Social Security Administration itself is facing a massive reorganization, job cuts and policy changes.

The Social Security COLA is calculated based on the CPI for urban workers, known as the CPI-W, which more heavily weights costs for transportation, food, apparel and other expenses faced by urban nonretirees. According to April's consumer-price data, the CPI-W was 2.1% higher than one year ago.

Consumer prices remain stubbornly higher for certain items, notably groceries, along with the cost of housing, automotive repairs and insurance.

"Trump administration tariffs are only beginning to have an impact raising consumer prices," said Johnson.

One exception was the cost of prescription drugs, she said. As measured by the Bureau of Labor Statistics, drug costs have not been growing quite as fast as in past years.

According to the Senior Citizens League's 2025 Senior Survey, which collected responses from 1,920 Americans eligible for Social Security, 20% spent at least $1,000 a month on healthcare. Meanwhile, 57% of American seniors get by on less than $2,000 of take-home income per month.

Lagging COLA adjustments risk pushing millions of seniors into poverty, the Senior Citizens League said.

"Our research puts numbers to what seniors have been telling us for years: Social Security benefits aren't keeping up with inflation, inadequate COLAs are to blame, and seniors aren't happy with Congress's failure to act. The vast majority of Americans, 55.8 million seniors - 93% - believe Social Security and Medicare reform should be a high or top priority for Congress and the presidential administration," Benton said.

President Donald Trump on Monday signed an executive order aimed at lowering prescription-drug costs. The executive order set a 30-day deadline for drugmakers to lower the cost of prescription drugs in the U.S. to match what they cost in other countries; otherwise, the government will limit what it is willing to pay.

"President Trump's executive order is a big step for Medicare's ability to negotiate prices," Benton said. "American taxpayers should not be paying more than the price charged in other countries for the same drugs, especially those made by American companies. American taxpayers shouldn't have to subsidize the rest of the world's healthcare while our own seniors are struggling to get by."

Johnson, however, said it remains unclear how the executive order would affect drug prices.

"An executive order ... is not the same thing as a law change giving Medicare the authority to use these prices in negotiations with drug companies," Johnson said.

Instead, the executive order appears to encourage direct-to-consumer sales using most-favored-nation pricing, which could apply to transactions outside of Medicare coverage, Johnson said. The executive order mentions waivers to allow for importing prescriptions from countries where prices may be lower.

"If that doesn't muddy the waters enough, one has to wonder what effect tariffs would have on the final drug prices," Johnson said.

-Jessica Hall

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May 13, 2025 11:45 ET (15:45 GMT)

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