Social Security’s COLA Enhancement Revealed for 2026 – What Retirees Should Know

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 the rising expenses of older Americans.

The Social Security Administration announced Friday morning that the 2026 cost of living adjustment for benefits will be 2.8%. The adjustment, also known as COLA, is calculated each year based on third-quarter inflation. The increased benefits will be reflected in checks starting in January.

This year’s announcement was delayed after a government shutdown prevented the headline inflation report from being released on time.

Will the amendment be sufficient for the beneficiaries?

The 2026 COLA is higher than the 2.5% adjustment for 2025; However, it may not be sufficient to keep up with the rising expenses of many retiree beneficiaries.

Social Security’s COLA is calculated using the Consumer Price Index for Urban Wage and Clerical Workers (CPI-W) for the third quarter of each year. This means that COLA uses inflation rates from July, August, and September.

However, because the formula uses historical data and is not predictive, experts say it does not accurately cover increases in expenses for Social Security beneficiaries. In addition, since the majority of beneficiaries are older Americans, some have argued that the Social Security Administration should use inflation reporting specifically for seniors’ expenses.

From 2010 to 2024, Social Security benefits rose 58%. However, expenses rose 73% during the same period, according to a report from the Senior Citizens Association. Specifically, the cost of Medicare, federal health insurance for disabled and older Americans, and other health care costs is growing faster than the cost of the annual COLA.

In a recent nationwide survey, more than half of retired Social Security beneficiaries said they are cutting discretionary spending because inflation is cutting into their budgets. More than a third said they would cut essential spending, such as medical services and food.