Overview
- The Federal Reserve lowered its benchmark rate by 0.25 percentage points on Dec. 10 to a 3.50%–3.75% target range in a 9–3 vote.
- Lower inflation expectations tied to that move have analysts projecting the 2027 Social Security COLA at roughly 2.3% to 2.6%, which would be the smallest increase since 2020 if realized.
- The 2026 COLA is set at 2.8%, with payments beginning in January 2026 and averaging about $56 more per month, according to recent reporting.
- COLAs are calculated from third‑quarter CPI‑W data, a measure that doesn’t fully reflect seniors’ heavier spending on healthcare and housing, contributing to an estimated 20% loss of buying power since 2010.
- Polling shows many middle‑class Americans worry that benefits won’t keep pace or could be reduced, underscoring concerns about the adequacy of modest annual increases.