2026 COLA Forecast – What a 2.7% Boost Could Do for Retirees Ages 62–80

Every year, the Social Security Administration (SSA) implements a Cost-of-Living Adjustment (COLA) to help beneficiaries keep pace with inflation.

This annual increase protects the real value of monthly benefits. For 2026, early forecasts now suggest a COLA between 2.5% and 2.7%, up from the 2.5% COLA in 2025.

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While these increases may seem modest, for millions of retirees ages 62 to 80, even small hikes matter—especially amid rising healthcare, housing, and everyday expenses.

In this article, we’ll explore how COLA is calculated, what the estimates imply for retirees in that age group, what factors may erode the effective benefit, and whether the projected boost is enough to keep up with costs.

How COLA Works & How the Estimate Is Derived

The calculation behind COLA is mechanical but sensitive to inflation data:

• The SSA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
• It averages the CPI-W for July, August, and September of the current year and compares it to the same months in the prior year.
• If the index has increased, the percentage difference becomes the COLA for the coming year.
• For example: a 3.0% increase in that quarter’s average would yield ~ 3.0% COLA.
• If the index is flat or declines, there may be no COLA that year.

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Because the September CPI data is not yet fully published, final COLA values remain pending.

Currently, the Senior Citizens League (TSCL) projects a 2.7% COLA for 2026, slightly above the 2025 figure. Some analysts cite a potential range up to 2.8%, though 2.7% remains the consensus midrange.

Impact on Monthly Benefits for Retirees (Ages 62–80)

Retirees in this age bracket often rely heavily on Social Security as a primary income source. The following table illustrates how different benefit levels might change under a 2.7% COLA:

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For example, someone receiving $2,008 monthly (around the average) could see approximately $54 more per month under a 2.7% increase.

Key Challenges That Eat Into the COLA Bump

Although the projected COLA is welcome, several factors may diminish its effective impact:

1. Rising Medicare Premiums
   Much of the COLA increase is expected to be absorbed by higher Medicare Part B premiums. A projected hike of $21.50 means that of the $54 COLA, around 40% could be consumed automatically.
2. Senior-Specific Inflation
   The CPI-W index is based on expenditures of urban wage earners—not retirees. Items that retirees spend heavily on (healthcare, utilities, medications) often inflate faster than the general CPI, meaning their cost burden may still outpace COLA.
3. Regional Cost Differences
   In high-cost states, the same percentage increase may be less meaningful compared to where cost-of-living is lower.
4. Taxation & Benefit Phase-Ins
   Increased income from COLA could push some retirees into a higher tax bracket or result in higher taxes on Social Security benefits, reducing net gains.
5. Long-Term Erosion
   Even with COLA, cumulative inflation over decades can erode purchasing power if benefits don’t consistently outpace costs.

Broader Economic Context

Inflation in the U.S. has cooled somewhat in recent months, but it remains above historic trends. Housing, health care, and energy costs continue to be volatile.

The delay in the September CPI release, caused by a partial government shutdown, has pushed back the COLA announcement to October 24, 2025. Once that data is in, the SSA will finalize the 2026 adjustment.

Analysts note that while 2.7% would be a slight improvement over 2025, many retirees fear it may not be enough to offset mounting expenses—especially with premiums and other costs rising faster.

The projected 2026 Social Security COLA—likely in the 2.5% to 2.7% range—offers a modest boost to retirees ages 62–80, helping benefits keep pace with general inflation.

While monthly gains of $40 to $100+ depending on benefit level are meaningful, they will likely be offset partially by rising healthcare premiums and taxes.

For retirees relying heavily on fixed incomes, the COLA is crucial—but not always sufficient to fully preserve purchasing power.

When the official announcement arrives in October, it will offer clearer direction for budgeting, benefits planning, and navigating the challenges ahead.

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