Social Security COLA 2026: What you need to know
What is the Social Security COLA for 2026?
The Social Security COLA for 2026 is a 2.8% increase in monthly payments, starting in January 2026.How is the Social Security COLA calculated?
The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It compares the average CPI-W from the third quarter of the previous year with the current year. Higher inflation in that index leads to a higher adjustment.Why might the COLA not fully cover rising costs for seniors?
Because CPI-W tracks spending for workers, it doesn’t always reflect retiree budgets. Medical care, housing, and long-term care tend to rise faster than the CPI-W basket, creating a gap between actual costs and the annual adjustment.On October 24, 2025, the Social Security Administration released its cost-of-living adjustment (COLA) for 2026. Beginning in January 2026, Social Security recipients will see a 2.8% increase in their monthly payments—slightly higher than the 2.5% adjustment in 2025—to help offset inflation. In general, the Social Security cost of living increase is based on the U.S. Consumer Price Index (CPI), so as costs rise, so does the COLA.
Key Points
- Social Security adjusts its estimated cost of living annually to account for inflation.
- The 2.8% adjustment for 2026 is slightly higher than the 2.5% increase in 2025.
- Retirees and those nearing retirement should review their other income sources and budget.
The 2.8% COLA was slightly lower than the 10-year average COLA of 3.1%, but it’s a far cry from 2023’s eye-popping 8.7%—the biggest in over 40 years. With inflation having come back to Earth in the post-pandemic economy, the 2026 Social Security COLA aims to reflect current prices of consumer goods and services.
The Social Security COLA may be a welcome boost for seniors, but it’s not a total solution for retirement expenses. If you’re setting goals for retirement savings, consider your income streams and how you’ll spend money after leaving the workforce. Inflation and other factors can impact your investment returns and your retirement.
What is the Social Security COLA for 2026?
On October 24, 2025, the SSA announced a 2.8% cost-of-living bump for 2026. What does that mean?
Social Security benefits are based on a formula that includes how many years you were in the workforce and how much you earned during those working years. Inflation—a general rise in the prices of the things we buy—is a regular part of the economic cycle. To account for that, each year the Social Security Administration reviews consumer prices and adjusts the monthly benefit.
How is the Social Security cost of living increase calculated?
The COLA benefits increase is calculated using a formula determined by Congress. Here are the basics of calculating the COLA:
- The inflation measure used is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
- The CPI-W measures the average prices for consumer goods and services that wage earners can expect to see in urban areas.
- The average CPI-W from the third quarter of the previous year is compared with the current year.
- If the current year’s calculation is higher, there’s a cost of living increase, expressed as a percentage.
- The increase is typically announced in mid-October for Social Security benefit payments beginning in January of the following year.
Long-standing concerns about how long Social Security will remain solvent have prompted various suggestions to change the COLA calculation. Proposals include making reductions or using a different version of the Consumer Price Index.
COLA calculation example
Suppose your monthly Social Security benefit for 2025 was $2,000. The 2.8% increase means that, for 2026, you’d add 2.8%.
($2,000 x 1.028) = $2,056. That would be your monthly benefit for 2026.
Does the Social Security COLA reflect senior spending realities?
Although the 2026 Social Security COLA roughly matches the official increase in consumer prices since last year, it doesn’t necessarily mean that seniors will be able to keep up with their expenses. Social Security benefits have lost 20% of their buying power since 2010, according to The Senior Citizens League (TSCL), an advocacy group.
Part of the issue, according to policy analysts at TSCL, is that the CPI-W may not accurately reflect costs faced by retirees. Seniors are seeing daily living expenses rise faster in certain areas that might not be included in the formula that determines the Social Security benefits COLA.
Medical care and housing expenses are among the biggest cost increases to seniors on Social Security, but they are underweighted in the CPI-W, according to TSCL. As a result, even with a benefits COLA, many retirees are unlikely to keep up with their increased costs if they rely heavily on Social Security.
Retirement goals and Social Security COLA
When planning for retirement, remember that Social Security’s COLA helps your benefits keep pace with inflation. But don’t assume a yearly increase will fully cover your rising expenses.
Social Security should make up only part of your retirement income. Even though the cost of living increase can help you keep pace with some expenses, it likely won’t shield you completely from inflation risk.
How much do seniors rely on Social Security?
Most retirees rely on Social Security for the bulk of their income, according to a 2025 study by The Senior Citizens League (TSCL). It found that 73% of seniors depended upon Social Security for more than half their income. Of those, 39% received all of their income from Social Security, while 34% relied on it for 51% to 99% of their income. TSCL’s findings also showed that the typical retiree lived on less than $2,000 a month.
If you have a retirement fund and/or other investments, think about how your portfolio is structured. Although many retirees shift away from stocks to bonds and other fixed-income securities, which have historically been less risky, fixed-income returns have a hard time keeping pace with inflation. Stocks are generally more risky, but they tend to outperform bonds over long stretches. So, if you expect a long life in retirement, keeping some of your portfolio in the stock market can help you stay ahead of inflation in the long term.
If you’re still working and earning an income, now’s the time to be thinking about other retirement income streams, such as investing in an annuity or even a rental property. Putting together a good mix of income sources can help you reach your retirement goals and increase the chances that you’ll outlive your money.
Can you rely on Social Security benefits in the future?
No matter your age, the concern about overreliance on Social Security is very real. The long-term stability of the program has been a topic of conversation among policymakers for decades. There’s a chance that Social Security benefits will be cut, or could even disappear at some point.
When planning your own retirement, think carefully about how you can build a nest egg and multiple streams of income. With long-term planning, Social Security benefits can become the cherry on top, rather than your main source of retirement income.
If you want to start planning for your retirement, check out the calculator below. Plug in the appropriate numbers to see how much you might need to save—and how long those savings might last. Are you on track?
The bottom line
The 2026 Social Security COLA is slightly higher than the 2.5% increase in 2025 but still well below 2023’s record 8.7% jump. Depending on how your expenses track the official CPI, the COLA may or may not cover you. Consider speaking with a financial professional about how you can protect your portfolio and meet your financial goals. Keep reading Britannica Money for retirement insights that can help you put together a long-term strategy that doesn’t rely too heavily on Social Security benefits.