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KEY TAKEAWAYS
- Social Security benefits will increase by 2.8% in 2026 to contend with the cost of living.
- However, rising prices for essentials like health care and groceries mean many seniors still feel they’re falling behind.
While Social Security beneficiaries will see larger paychecks next year, the annual cost-of-living adjustment for 2026 may not be enough to keep up with older Americans’ growing expenses.
The Social Security Administration announced on Friday morning that the 2026 cost-of-living adjustment for benefits will be 2.8%. The adjustment, also known as COLA, is calculated every year based on inflation in the third quarter. The increased benefits will be reflected in checks starting in January.
This year’s announcement was delayed after the government shutdown stopped a key inflation report from being released on time.
Why This Matters to You
Retired Americans must budget around a fixed income, especially the nearly 22 million seniors who rely solely on Social Security benefits. Knowing how their benefits will change for 2026 is essential for them to prepare for the coming year.
Will The Adjustment Be Enough For Beneficiaries?
The 2026 COLA is higher than the 2.5% adjustment for 2025; however, it may not be sufficient to keep pace with the rising expenses of many retired beneficiaries.
The Social Security COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of each year. That means the COLA utilizes inflation rates from July, August, and September.
However, since the formula uses past data and is not predictive, experts argue it does not accurately cover increases in Social Security beneficiaries’ expenses. In addition, as the majority of beneficiaries are older Americans, some have argued that the SSA should use inflation reports specifically for senior expenses.
From 2010 to 2024, Social Security benefits rose by 58%. However, expenses rose by 73% during the same time, according to a report from The Senior Citizens League. Specifically, the cost of Medicare, the federal health insurance for disabled and older Americans, and other health care costs are growing faster than the annual COLA.
In a recent Nationwide survey, more than half of retired Social Security recipients said they are cutting discretionary spending as inflation is cutting into their budgets. Over a third said they are reducing essential spending, such as medical services and food.
