BALTIMORE (TECHY QUANTUM) —The Social Security Administration announced Friday that benefits for millions of Americans will rise by 2.8% in 2026, marking a moderate cost of living adjustment as inflation stabilizes.
The increase translates to an average monthly boost of about $56 for retirees beginning in January, according to the agency.
The annual COLA affects nearly 75 million beneficiaries across Social Security and Supplemental Security Income programs. While the adjustment is designed to offset rising living costs, many retirees say it may still fall short of covering growing expenses for housing, food, and medical care.
“Social Security is a promise kept, and the annual cost of living adjustment is one way we ensure benefits reflect today’s economic realities,” said Commissioner Frank J. Bisignano in a statement. “Our goal is to help Americans maintain stability and dignity in retirement.”
The cost of living adjustment was established to protect retirees and other beneficiaries from losing purchasing power as prices rise.
The calculation is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measured from the third quarter of one year to the next.
In 2023, the COLA reached 8.7%, the highest in four decades, as inflation surged following the COVID-19 pandemic. The adjustment dropped to 3.2% in 2024 and 2.5% in 2025, reflecting slowing price growth.
The 2.8% increase for 2026 signals continued economic stabilization, though inflation remains above pre pandemic averages.
“After several volatile years, the COLA for 2026 represents a return to normalcy,” said Elaine Porter, a senior economist at the Center for Retirement Policy. “But for those living on fixed incomes, even modest price increases can feel significant.”
Economists say the 2.8% COLA increase will help retirees keep pace with moderate inflation but may not fully offset rising health care costs or housing expenses.
According to projections from the Medicare Trustees Report, the standard Medicare Part B premium could increase by 11.6%, from $185 to about $206.50 per month.
Since Medicare premiums are typically deducted directly from Social Security checks, some retirees may see smaller net gains.
“Health care costs remain one of the fastest growing expenses for older Americans,” said Dr. Martin Feld, a retirement policy analyst at the Brookings Institution. “While the COLA helps cushion the blow, the reality is that medical inflation often outpaces general inflation.”
The Social Security Administration encourages beneficiaries to calculate their expected increase by multiplying their current monthly benefit by 2.8%, or 0.028.
Other variables, including tax withholdings and income related monthly adjustment amounts (IRMAAs) for higher earners, can further influence final payments.
Beneficiaries may opt to have 7%, 10%, 12% or 22% of their benefits withheld for federal income taxes, depending on their total income.
For a typical retiree receiving the average monthly benefit of $2,000, the 2.8% COLA translates to an increase of about $56 per month, or roughly $672 per year.
That increase is slightly higher than the 2.5% adjustment in 2025, which added about $49 per month. In 2024, beneficiaries received a 3.2% increase, or around $61 per month, while the record 8.7% jump in 2023 resulted in an average gain of nearly $160 monthly.
Although the 2026 increase marks improvement from this year, it remains below the historical average COLA of 3.4% since automatic adjustments began in 1975.
Inflation has cooled significantly from its 2022 highs, but prices for essentials such as rent, energy, and groceries continue to rise faster than overall wage growth. Economists say that gap keeps pressure on retirees relying solely on Social Security for income.
For many retirees, even small changes in Social Security income can make a major difference. “I appreciate any increase, but it feels like we’re still running to catch up,” said Mary Lopez, a 72 year old retired teacher from Arizona.
“My rent went up again this year, and groceries don’t seem to get any cheaper.” Others view the adjustment as a necessary safeguard amid economic uncertainty.
“The COLA is what keeps me afloat,” said James Whitaker, a retired construction worker from Ohio. “It’s not a windfall, but it helps cover my medications and heating bills through the winter.”
Advocacy groups, including AARP, welcomed the increase but urged policymakers to consider broader reforms to strengthen the long term sustainability of Social Security.
Every year’s COLA is a reminder of how vital Social Security is for millions of Americans, said Nancy Leathers, an AARP policy director. “But we must ensure that future retirees can depend on this system for decades to come.”
Experts predict that future COLA adjustments will remain modest as inflation steadies near the Federal Reserve’s 2% target.
However, demographic pressures including a rapidly aging population and the strain on the Social Security Trust Fund continue to raise concerns.
The Social Security Trustees Report projects that without legislative action, the combined trust funds could face shortfalls by 2035, leading to potential benefit reductions.
Lawmakers have yet to reach a consensus on measures such as raising payroll taxes, adjusting eligibility ages, or modifying benefit formulas.
“COLA increases are important for maintaining value,” said Porter, the retirement economist, “but the larger question is whether the system can sustain these payments as more Americans retire and live longer lives.”
The 2.8% COLA increase for 2026 offers modest relief to millions of retirees and disabled Americans who depend on Social Security benefits. While the adjustment reflects slowing inflation, it may not fully offset the rising costs of health care and daily living.
As the nation’s aging population grows, the annual cost of living adjustment remains a key measure of the government’s commitment to preserving financial stability for older Americans even as debates over the future of Social Security continue in Washington.