The cost-of-living adjustment (COLA) for 2026 Social Security benefits has been set, and retirees will see a 2.8 percent increase in their monthly payments starting next year.
The Social Security Administration announced the updated benefit amounts after reviewing the latest inflation data from the Bureau of Labor Statistics.
Why It Matters
Roughly 75 million Americans depend on Social Security each month. Benefit amounts are based on a combination of work history and past earnings, but they are also adjusted annually using the consumer price index for urban wage earners and clerical workers (CPI-W) to help keep pace with inflation.
What To Know
A 2.8 percent COLA works out to about $56 more per month for the average Social Security retiree.
That’s a slightly higher boost than this year’s 2.5 percent increase, but many seniors and advocates argue that it still falls short of matching real-world price hikes on everyday necessities.
Michael Ryan, a finance expert and founder of MichaelRyanMoney.com, told Newsweek, “It’s a hollow raise. Medicare’s taking the first $21.50 before seniors see a dime.”
With Medicare Part B premiums rising to $206.50, many beneficiaries will effectively see only about $34.50 more in their pockets each month.
The Senior Citizens League had previously cautioned that even a 2.7 percent COLA would not adequately cushion older Americans from current economic pressures.
“Our team predicts a 2.7 percent COLA, a slight increase from last year’s 2.5 percent. But even with that bump, it still won’t be enough to cover the rising costs seniors face,” the organization said at the time, noting that essentials like housing, healthcare and groceries are climbing faster than the COLA can offset.
What People Are Saying
Social Security Administration Commissioner Frank J. Bisignano said in a statement:
“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security. The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek:
“The COLA announcement this week is pivotal for millions of seniors who rely on Social Security benefits as a key source of income, as it details how much of an increase they’ll see in their check amounts to meet inflation for the coming year. As prices continue to rise and many are concerned the full effect of tariffs is still not being felt in many items, many seniors may feel like the increase won’t match the extra amount they’ll need to cover expenses.”
Ryan also told Newsweek:
“Here’s the brutal math: 40 percent of your COLA evaporates before it hits your checking account. For the 4 in 10 seniors who depend entirely on Social Security, that’s not a cost-of-living adjustment, that’s a cost-of-healthcare tax disguised as a benefit increase.”
Kim Scouller, a financial professional with World Financial Group, added:
“The COLA increase is a lifeline for retirees and anyone on a fixed income. But it’s not designed to make retirees richer, it’s designed to help them stay even. With inflation still sticky in essentials like food, utilities, and insurance, retirees must know how to make every increase count.”
What Happens Next
According to Ryan, seniors have lost about 20 percent of their Social Security purchasing power since 2010 because COLA increases often fail to match actual inflation.
“When housing, food, and medical costs are climbing faster than the formula accounts for, it’s like getting a 3 percent raise while your rent goes up 8 percent,” he said.
“This isn’t good or bad news. It’s predictably inadequate news. Seniors shouldn’t plan around their COLA. They need to plan despite it.”
The new COLA increase will be reflected in Social Security payments beginning with January’s checks.
