While the 2026 Social Security COLA could still change significantly over the coming months, the latest inflation data suggests that it could be the lowest adjustment since 2021.
May 14, 2025 - NAPA
By:Ted Godbout
While the 2026 Social Security COLA could still change significantly over the coming months, the latest inflation data suggests that it could be the lowest adjustment since 2021.
According to estimates by The Senior Citizens League (TSCL) and Mary Johnson, a retired Social Security and Medicare policy analyst, the 2026 COLA may be 2.4% after the Bureau of Labor Statistics (BLS) announced the CPI-W increased 0.3% in April, resulting in a 2.1% increase over the last 12 months.
The CPI-W is the index used to calculate the annual adjustment to Social Security benefits.
Last month, TSCL had predicted — based on March data — that the 2026 COLA would be 2.3%. For comparison, the 2025 COLA was 2.5%, while the 2024 COLA was 3.2%, after reaching a four-decade high of 8.7% in 2023, and 5.9% in 2022, following the height of the COVID-19 pandemic.
TSCL notes that if its prediction for 2026 holds, seniors can expect next year’s COLA to be the lowest since the 1.3% implemented in 2021. “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,” stated TSCL Executive Director Shannon Benton. “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.”
Johnson observes that, while the estimate is higher than last month’s forecast, it’s still may underestimate the final 2026 COLA, as the Trump Administration tariffs are only beginning to have an impact raising consumer prices.
Meanwhile, these latest estimates come after President Trump signed an executive order this week aimed at lowering prescription drug costs. The executive order sets a 30-day deadline for drugmakers to lower the cost of prescription drugs in the U.S. to match what they charge in other countries. Otherwise, the government will limit what it is willing to pay.
Still, Johnson notes that while consumer prices remain higher for certain items, one exception is the cost of prescription drugs. As measured by the Bureau of Labor Statistics, drug costs have not been growing quite as fast as in past years, remaining only 2.3% through April one year ago.
Since 2023, the Inflation Reduction Act requires drug companies to pay Medicare rebates if drug prices rise faster than inflation. “That provision, which was widely supported by Medicare beneficiaries could be restraining runaway drug prices,” noted Johnson. In 2025, for the first time, a new $2,000 limit caps what plans can charge out–of–pocket for covered prescription medications. What’s more, she added, 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.
Overall, inflation edged up just slightly. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% on a seasonally adjusted basis in April, after falling 0.1% in March. Over the last 12 months, the all-items index increased 2.3% before seasonal adjustment.
By law, the annual inflation adjustment is based on the average inflation during July, August, and September as measured by the CPI-W. The Bureau of Labor Statistics averages the CPI-W for these three months and then compares it with the same timeframe from the previous year. The percentage difference between the two is the annual COLA, payable for checks received in January 2026.