Social Security COLA for 2026 set at 2.8% as inflation persists

Social Security beneficiaries will see a 2.8% increase in their monthly payments in 2026, the Social Security Administration announced Friday, reflecting ongoing inflationary pressures and marking the fifth consecutive year of cost-of-living adjustments at or above 2.5%.

The adjustment, which applies to Old-Age, Survivors, and Disability Insurance as well as Supplemental Security Income, will affect roughly 75 million Americans starting in January.

On average, Social Security retirement benefits will rise by about $56 per month, according to the agency's announcement Friday. The average monthly benefit for a retired worker is expected to increase from $2,015 to $2,071, while survivor benefits and disability payments will also see modest gains. Payments to nearly 7.5 million SSI recipients will begin reflecting the new rates on December 31.

The annual cost-of-living adjustment, or COLA, is calculated based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year. In 2025, the CPI-W rose by 2.9% in September, 2.8% in August, and 2.5% in July compared to the previous year, according to data released by the Bureau of Labor Statistics.

Because the COLA is based on the prior year’s inflation, there can be a lag in how it affects retirees’ purchasing power. For instance, the 2022 COLA of 5.9% was quickly outpaced by inflation that reached 9% that year, prompting an 8.7% adjustment for 2023.

“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,” said Social Security Administration Commissioner Frank J. Bisignano. He described the COLA as “a vital part of how Social Security delivers on its mission.”

For many older Americans, Social Security remains a primary source of income. An analysis by the Senior Citizens League found that 73% of seniors rely on Social Security for more than half their income, and 39% depend on it entirely. The group’s research also points to widespread dissatisfaction with the size of recent COLAs, with only 10% of seniors expressing satisfaction and 94% saying the 2025 adjustment was too low to keep up with rising costs.

“The 2026 COLA is going to hurt for seniors,” said Shannon Benton, executive director of the Senior Citizens League. She added that “year after year, they warn that Social Security’s meager increases won’t be enough,” citing Census Bureau data that about one-tenth of retirement-age Americans live in poverty.

The calculation of the COLA itself has been a point of debate. Some advocacy groups, including the Senior Citizens League, have called for switching from the CPI-W to the Consumer Price Index for the Elderly (CPI-E), arguing that the latter better reflects seniors’ spending habits and would result in higher adjustments in most years.

Lisa Featherngill, national director of strategic wealth & business advisory at Comerica Wealth Management, pointed to the rising costs in housing, healthcare, and groceries confronting many retirees – costs which often grow faster than the inflation measure used to determine COLA.

"While this adjustment helps many retirees keep pace, it underscores why relying solely on Social Security isn’t enough," Featherngill said.

Meanwhile, the Social Security program faces long-term funding challenges. The maximum amount of earnings subject to Social Security tax will rise to $184,500 in 2026, up from $176,100. Despite this increase, the trust funds that support Social Security have seen outflows exceed revenue in recent years. Trustees project that, without congressional action, the funds could be depleted by 2034, at which point only 81% of scheduled benefits could be paid.

One proposal, sure to be branded as radical by some, suggests placing a cap on adjustments for the highest-earning retirees. A white paper shared by the Committee for a Responsible Federal Budget this week suggests a cap for the 75th percentile would help close one-tenth of the solvency gap facing the Social Security program.