Social Security beneficiaries will see their payments increase 2.8% in January 2026, thanks to the program’s annual cost-of-living adjustment. The announcement came on Friday and was delayed due to the ongoing government shutdown.
Known as the COLA, this increase is intended to ensure Social Security benefits keep up with the rate of inflation. Some argue, however, that the current method for determining the COLA fails to do that.
“It doesn’t always work out like that in practice,” says Noah Damsky, founder of Marina Wealth Advisors in Los Angeles.
Here’s what Americans should know about the Social Security COLA for 2026.
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What Is the 2026 COLA Increase for Social Security?
The 2026 Social Security COLA raise is 2.8%. The COLA goes into effect in December and will be reflected in January payments. The average monthly payment for retired workers, as of July 2025, was $2,005.
On average, the 2026 COLA will raise payments by about $56 per month starting in January.
That amount reflects the percentage change in the average consumer price index for urban wage earners and clerical workers, called the CPI-W, from the third quarter of 2024 to the third quarter of 2025. The CPI-W is intended to represent a “basket” of goods and services that consumers may purchase and measure any increase in the cost of those items.
At one time, COLAs had to be individually authorized by Congress, but a 1972 law automated the process. Since 1975, Social Security beneficiaries have received an automatic annual adjustment to their benefit amount.
“For most clients, it’s the only income that increases over time,” says Keith Fenstad, director of wealth planning at Tanglewood Total Wealth in Houston.
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How the 2026 COLA Compares to Other Years
The 2026 COLA is higher than the 2.5% increase in benefits that retirees received in 2025.
“The COLA increase is not guaranteed each year,” says Ford Stokes, a registered Social Security analyst and CEO of Active Wealth Management in Alpharetta, Georgia.
Some years, inflation is flat, and there is no COLA. That happened most recently in 2015. Benefits can never decline, though, so even if the country enters a deflationary period, retirees don’t have to worry about a reduction in their Social Security benefits.
Here are the Social Security COLAs from the past decade:
| Year | COLA |
| 2026 | 2.8% |
| 2025 | 2.5% |
| 2024 | 2.5% |
| 2023 | 3.2% |
| 2022 | 8.7% |
| 2021 | 5.9% |
| 2020 | 1.3% |
| 2019 | 1.6% |
| 2018 | 2.8% |
| 2017 | 2% |
| 2016 | 0.3% |
| 2015 | 0% |
Is the 2026 COLA Enough for Retirees?
For some retirees, next year’s increase in Social Security benefits may not be enough to offset rising costs.
“For our clients, we do a 3% increase on annualized income as a rule of thumb,” says Michael Foguth, president of Foguth Financial Group in Brighton, Michigan. That means that he plans on his clients spending 3% more during the next year. When the COLA doesn’t match that amount, funds need to come from elsewhere.
“I think retirees are going to have to tap into their savings earlier or more than expected,” Damsky says. “They should plan every year for the COLA to not cover rising expenses. This is something we just need to build into our mindset.”
He adds that retirees should also be careful not to become too conservative in their investments too quickly. If they do, their investments may not gain enough to keep up with inflation.
Retirees can also improve their financial situation by clearing out debt. “The happiest clients we have are people who have paid their houses off,” Stokes says.
By keeping expenses low, people may not have to worry about whether the Social Security COLA will be enough to help them pay their bills. Instead, as Fenstad says, it might end up just being “icing on the cake.”
[Read: 4 Reasons Your Social Security Payment Is Delayed and What to Do About It]
Can the Social Security COLA Keep Up With Rising Costs?
The 1972 law stipulates that the COLA must be based on the consumer price index, and at that time, there was only one way to measure the CPI. Today, there are multiple versions.
The CPI-W, which is currently used to set Social Security’s COLA, is based on the prices of goods and services purchased by urban households that receive more than half their income from clerical occupations or hourly wages. These households make up about 30% of the country’s population, according to a 2025 Congressional Research Services report.
Some say the CPI-W doesn’t accurately reflect goods and services that seniors purchase. Most notably, they believe it underrepresents the level of health care services used by older Americans.
“I feel like the CPI-E would be a better representative for seniors,” Stokes says.
Deemed an “experimental” CPI by the Bureau of Labor Statistics, the CPI-E was designed to better represent the expenses of those age 62 and older. According to Stokes, it is usually 5% higher than the CPI-W, which means that if the CPI-W were 3%, the CPI-E would be 3.15%.
A 2024 analysis by Congressional Research Services found that the 2025 COLA would have been 3% instead of 2.5% if the CPI-E had been used. That would equate with $9 more per month for someone receiving the average retired worker benefit amount.
There has also been some discussion about using a “chained CPI” for the COLA. This CPI is adjusted to account for changes in consumer spending patterns and to eliminate statistical bias. A chained CPI is used in annual updates to federal income tax brackets, among other things.
A chained CPI grows 0.25 percentage points slower than other CPI measures, according to the Congressional Budget Office. That means the COLA would likely be lower using this measure. While that may not be ideal for retirees, it could benefit the Social Security system as a whole.
“Chain-linked CPI is part of the solution to make the program more solvent,” according to Fenstad.
Smaller COLAs mean more money remains in the combined Social Security trust funds, which are currently expected to be depleted by 2034.
“It’s kinda like a big family meal. Someone will always be disappointed,” Damsky says. Retirees and government officials have competing interests. Seniors undoubtedly would like larger payments, but “I don’t think that (the government) really wants to pay out more money with higher COLAs,” Damsky says.
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What Will the Social Security COLA Raise Be for 2026? originally appeared on usnews.com
Update 10/24/25: This story was published at an earlier date and has been updated with new information.
