One index, one quarter
The COLA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, the CPI-W, and only three months of it: July, August and September. Their average is compared with the same three-month average from the last year that produced a COLA, and the percentage rise is the raise.
For benefits paid from January 2026, the July–September 2025 average was 317.265 and the 2024 average 308.729. 317.265 ÷ 308.729 − 1 = 2.765%, which rounds to the 2.8% COLA SSA announced. Work every year from 2008 to 2025 the same way and each result matches SSA's published figure.
Worked example
Q3 2025 = (316.349 + 317.306 + 318.139) ÷ 3 = 317.265
Q3 2024 = (308.501 + 308.640 + 309.046) ÷ 3 = 308.729
317.265 ÷ 308.729 − 1 = 2.765% → 2.8%
Why the comparison can reach back more than a year
When the third-quarter average falls, there is no COLA, and no cut either. The CPI-W for July–September 2009 was below the 2008 quarter, so benefits stayed flat for 2009 and again for 2010, when the index had still not climbed back above its 2008 level.
The next raise was then measured from the last quarter that produced one. The 3.6% COLA for 2011 compared the 2011 quarter with 2008's, not 2010's. The same thing happened after 2015: the 0.3% raise for 2016 was measured from the 2014 quarter.
Two roundings on the raise, a third on the payment
The regulation rounds the rise to the nearest tenth of a percent, with 0.05% and above going up: a 3.15% rise is a 3.2% COLA. SSA then applies that percentage to each benefit amount and rounds the result down to the next lower dime. A $1,234.56 benefit raised 2.8% is $1,269.12768, which becomes $1,269.10.
The payment is rounded once more. After Medicare premiums and any other deductions, a monthly benefit that is not a whole number of dollars is reduced to the next lower dollar. Every rounding is downward after the first, so a calculation that skips them lands a little high.
What the percentage is applied to
SSA raises your primary insurance amount, the benefit you would get at full retirement age, and then works out the payment from it, including any reduction for claiming early or credit for claiming late. Each of those steps is rounded down to the dime.
Raising the benefit shown on your statement by the same percentage gets you within a few cents to a dollar of SSA's figure, which is close enough for a budget but not a substitute for the notice SSA sends before the new amount is paid.
Part B comes out of the same check
For people who get Social Security, the Medicare Part B premium is normally deducted from the benefit, so a premium increase eats into the raise. The standard premium rose from $185.00 in 2025 to $202.90 in 2026, $17.90 a month.
On a $2,000 benefit the 2.8% COLA added $56, taking it to $2,056.00. But the payment after Part B went from $1,815 to $1,853: $38 more, not $56. CMS sets each year's premium in November, after the COLA is announced, so the real change in your deposit is known only then.
Worked example
$2,000.00 × 1.028 = $2,056.00
2025: $2,000.00 − $185.00 = $1,815
2026: $2,056.00 − $202.90 = $1,853.10 → $1,853
Reading the estimate for 2027
Before October, the COLA can only be estimated. By late September two of the three months are published: the CPI-W was 327.104 in July 2026 and 328.481 in August. If September matches August, the quarter averages 328.022 against the 2025 base of 317.265, a 3.39% rise that rounds to 3.4%.
A tenth either way is still possible: a September of 327.5 gives 3.3%, and one of 329.466 gives 3.5%. The Bureau of Labor Statistics publishes September's figure on October 14, 2026, and that settles the raise paid from January 2027.
Common mistakes
Using the headline CPI-U instead of the CPI-W.The COLA follows the wage-earner index, which can differ from the CPI-U by a few tenths.Using the annual average inflation rate.Only the July–September average counts; the rest of the year does not enter the calculation.Comparing with last year after a zero-COLA year.After a year with no raise, the comparison reaches back to the last quarter that produced one.Expecting the payment to rise by the full percentage.Rounding down and the Part B premium usually leave the deposit increase smaller than the headline raise.