The COLA formula, two months in: CPI-W is 3.3% above its base
Social Security's COLA is set by three monthly CPI-W readings. July and August 2026 are in; September's arrives October 14. Here is the arithmetic so far.
- What happened
- The Social Security cost-of-living adjustment is fixed by arithmetic, not discretion: the average CPI-W for July, August and September against the same three months of the most recent year a COLA took effect. Two of the three 2026 readings have been published, and their average stands 3.3% above the third-quarter 2025 base. That partial figure is not the COLA.
- Why
- The 2026 COLA of 2.8%, announced on October 24, 2025, came from a third-quarter 2025 CPI-W average of 317.265 against 308.729 a year earlier. The 2025 average of 317.265 is the base for the next calculation, and the September 2026 index is the missing input.
- The numbers that matter
- 2.8%COLA for 2026, announced by SSA on Oct 24, 2025317.265CPI-W, July–September 2025 average: the base3.3%July–August 2026 average vs that base: partial, not the COLA$56Average retired-worker increase, January 2026
- Why it matters
- SSA estimated the average retired-worker benefit at $2,015 a month before the 2.8% COLA and $2,071 after it, an increase of $56. Each percentage point of COLA on a $2,071 benefit is $20.71 a month.
- What happens nextas we saw it on 7 Oct 2026
- The Bureau of Labor Statistics is scheduled to publish the September 2026 CPI, including the CPI-W, on Wednesday, October 14, 2026, at 8:30 a.m. ET. SSA cannot compute the COLA before that index exists and announces it afterwards.
The formula produced 8.7% in one year and 2.5% in another. The same three-month rule generated both.
| Jan 2022 | 5.9% |
|---|---|
| Jan 2023 | 8.7% |
| Jan 2024 | 3.2% |
| Jan 2025 | 2.5% |
| Jan 2026 | 2.8% |
The raise that reached 75 million Americans in January 2026 was set by three numbers. They were the Consumer Price Index for Urban Wage Earners and Clerical Workers, the CPI-W, for July, August and September 2025. No committee voted on it. The Social Security Administration added the three index levels, divided by three, and compared the result with the same figure a year earlier.
The index that does this job is not built around retirees. The Bureau of Labor Statistics says the CPI-W population “represents approximately 30 percent of the total U.S. population”. It counts only households that get more than half their income from clerical or wage occupations, with at least one earner employed for at least 37 weeks of the previous 12 months.
Two of the three readings that set the next adjustment have now been published. This piece shows the formula, the arithmetic behind the 2026 figure, and what July and August 2026 add up to so far. It does not say what the next COLA is going to be. The third reading does not yet exist.
The rule, in SSA's own words
SSA's Office of the Chief Actuary states that COLAs “are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)”. The adjustment is the percentage increase, if any, in the CPI-W from the average for the third quarter of the most recent year in which a COLA became effective to the average for the third quarter of the year of the calculation. “If there is an increase, it must be rounded to the nearest tenth of one percent.”
Under 20 CFR § 404.275, SSA computes each quarterly average “by adding the three monthly CPI figures, dividing the total by three, and rounding the result to the same number of decimal places as the published CPI figures”, which is three. The increase is rounded “to the nearest 0.1 percent by rounding 0.05 percent and above to the next higher 0.1 percent”. Benefit amounts after the increase are rounded down to the next lower multiple of $0.10.
Three details matter. The index is not seasonally adjusted. The comparison is between quarterly averages, so one unusual month counts for one third. And the base is the most recent year in which a COLA took effect, not simply the prior year. After a year with no increase, the comparison reaches further back. SSA's table shows 0.0% for the adjustment effective December 2015.
The COLA takes effect with December benefits, which are paid in January. For the 2026 increase, SSA said Social Security benefits would rise “beginning in January 2026” and Supplemental Security Income payments “on December 31, 2025”.
How 2.8% was produced
| Month | 2024 | 2025 |
|---|---|---|
| July | 308.501 | 316.349 |
| August | 308.640 | 317.306 |
| September | 309.046 | 318.139 |
| Third-quarter average | 308.729 | 317.265 |
July, August and September 2025 sum to 316.349 + 317.306 + 318.139 = 951.794. Divided by three, that is 317.2647, published as 317.265. The rise from 308.729 is (317.265 − 308.729) ÷ 308.729 = 8.536 ÷ 308.729 = 2.765%. Rounded to the nearest tenth, that is 2.8%, the figure SSA printed.
SSA announced the figure on Friday, October 24, 2025, the same day the Bureau of Labor Statistics published the September 2025 CPI. The order is fixed by the formula: the September index is an input, so the adjustment cannot be computed until it is published.
Where the 2026 inputs stand after two months
| Month | 2025 | 2026 | 12-month change |
|---|---|---|---|
| July | 316.349 | 327.104 | 3.4% |
| August | 317.306 | 328.481 | 3.5% |
| September | 318.139 | Due Oct 14, 2026 | — |
The Bureau reported on August 12, 2026 that the CPI-W “increased 3.4 percent over the last 12 months to an index level of 327.104” in July, unchanged on the month before seasonal adjustment. On September 11, 2026 it reported that the CPI-W “increased 3.5 percent over the last 12 months to an index level of 328.481” in August, up 0.4% on the month before seasonal adjustment.
(327.104 + 328.481) ÷ 2 = 655.585 ÷ 2 = 327.7925. Against the third-quarter 2025 average of 317.265, that is (327.7925 − 317.265) ÷ 317.265 = 3.318%. This is not the COLA. It uses two months, not three, and it is not an SSA figure. It describes July and August 2026 only.
September is one third of the quarterly average. A difference of 1.000 in the September 2026 index moves the average by 0.333, and moves the percentage comparison with 317.265 by 0.333 ÷ 317.265 = 0.105 percentage points. That is the sensitivity of the formula, not an estimate of the September index.
Rounding happens once, on the full three-month comparison, and a figure near a rounding boundary can go either way on a small September move. The 2026 COLA shows how much rounding matters: the unrounded rise was 2.765%, and the published adjustment was 2.8%.
The calendar
The Bureau's release for August 2026 states that “the Consumer Price Index news release for September 2026 is scheduled to be published on Wednesday, October 14, 2026, at 8:30 a.m. (ET)”. Its published 2026 schedule shows the same date. SSA's announcement follows the September index. We do not give a date for it, because SSA has not published one.
What it means for your money
SSA's 2026 fact sheet estimates the average monthly benefit for all retired workers at $2,015 before the 2.8% COLA and $2,071 after it. SSA's announcement put the average increase in retirement benefits at “about $56 per month starting in January”.
$2,015 × 1.028 = $2,071.42, which matches SSA's $2,071. The increase is $2,015 × 0.028 = $56.42. On a $2,071 monthly benefit, each percentage point of COLA is $20.71 a month, or $248.52 over 12 months. A 0.1-point rounding step is $2.07 a month.
The Centers for Medicare & Medicaid Services set the standard 2026 Part B premium at $202.90 a month, up $17.90 from $185.00 in 2025. For a beneficiary on the average retired-worker benefit who pays the standard premium out of that benefit, $56 − $17.90 = $38.10 of the January 2026 increase was left in the monthly payment. Individual premiums vary with income.
The mechanism matters more than any single year. A COLA is a percentage, so it adds more dollars to a larger benefit. It is measured on the CPI-W, a price index for working households, so it tracks a basket that is not a retiree's own. It is also backward-looking: it describes prices between one third quarter and the next, and is paid from the following January. Readers checking their own figures can use the real versus nominal distinction. A benefit that rises by the COLA keeps pace with the CPI-W, not necessarily with their own costs.
For how the underlying index is assembled, see how the CPI is built. For the gap between headline and core CPI, see core versus headline. The release calendar lists the October 14, 2026 CPI publication.
Sources
- Latest Cost-of-Living AdjustmentSocial Security Administration, Office of the Chief Actuary · Oct 4, 2026 · Primary source
- Code of Federal Regulations § 404.275: How is an automatic cost-of-living increase calculated?Social Security Administration · Oct 4, 2026 · Primary source
- Cost-Of-Living AdjustmentsSocial Security Administration, Office of the Chief Actuary · Oct 4, 2026 · Primary source
- Social Security Announces 2.8 Percent Benefit Increase for 2026 (press release, October 24, 2025)Social Security Administration · Oct 4, 2026 · Primary source
- 2026 Cost-of-Living Adjustment (COLA) Fact SheetSocial Security Administration · Oct 4, 2026 · Primary source
- Consumer Price Index News Release — July 2025 (released August 12, 2025)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Price Index News Release — August 2025 (released September 11, 2025)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Price Index News Release — September 2025 (released October 24, 2025)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Price Index News Release — July 2026 (released August 12, 2026)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Price Index News Release — August 2026 (released September 11, 2026)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Schedule of Releases for the Consumer Price IndexU.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- 2026 Medicare Parts A & B Premiums and Deductibles (fact sheet, November 14, 2025)Centers for Medicare & Medicaid Services · Oct 4, 2026 · Primary source
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