The Cost of Living Adjustment (COLA) that increases Social Security benefits every year is likely to be lower than in previous years, new forecasts suggest.

The Social Security Administration (SSA) pays out billions of dollars in benefits every month to nearly 70 million recipients. These benefits are, more often than not, increased every year to reflect inflation and the rising cost of living.

The Senior Citizens League (TSCL) and independent Social Security and Medicare analyst Mary Johnson both expect the Social Security annual increase to drop by 0.3 percent, from 2.5 percent for benefits paid in 2025 to 2.2 percent for 2026.

The TSCL figure is down 0.1 percent from its February forecast.

COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks spending by working Americans. The Bureau of Labor Statistics conducts a quarterly survey to assess the spending habits of American citizens, analyzing price fluctuations for approximately 80,000 products. The resulting data is then aggregated into an index that measures changes in percentage.

Every year, the COLA is based on the average CPI-W in the third quarter of the current year and the average CPI-W in the same period of the previous year. If there is an increase, that percentage is rounded to the nearest 10th of 1 percent, and that determines how much benefits will be boosted by.