The Social Security Administration on Friday announced a 2.8% cost-of-living adjustment for 2026, an increase that will automatically boost monthly payments for the program’s roughly 71 million beneficiaries starting early next year.
The increase represents an uptick from the last year’s cost-of-living adjustment, or COLA, which set the 2025 increase at 2.5%. Inflation has edged higher this year. The Labor Department said Friday that the Consumer Price Index, a closely watched gauge of U.S. inflation, rose at an annual rate of 3% in September.
Next year’s COLA increase will boost the average Social Security payment by about $56 to an average monthly benefit of $2,071, starting in January, the Social Security Administration said. People who receive Supplemental Security Income, a program for low-income and disabled people, will see their first COLA increase with their Dec. 31, 2025 check, the agency said.
The annual COLA is designed to ensure that seniors, disabled Americans and other Social Security beneficiaries don’t lose purchasing power to inflation. Even so, a recent poll by the AARP, an advocacy group for older Americans, found that many seniors think the retirement program’s inflation adjustments are falling short and that they need an annual COLA of about 5% to keep up with their daily expenses.
“The cost-of-living adjustment for Social Security is one of the few inflation-adjusted programs for retirees,” Jenn Jones, AARP’s vice president of government affairs, told CBS News. “It is incredibly important to millions of Americans, and so although it may not feel like it’s quite enough, especially after the last few years, it’s critically helpful for keeping pace with rising costs.”
In a statement, Social Security Administration Commissioner Frank Bisignano said the cost-of-living adjustment “is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security.”
How SSA calculates its annual COLA
The Social Security Administration announces the COLA each fall based on a metric known as the “Consumer Price Index for Urban Wage Earners and Clerical Workers,” or CPI-W, which tracks the average change in prices paid by workers for a basket of commonly bought goods and services.
The COLA is based on that inflation data from July through September.
Some advocates for older Americans say the CPI-W fails to accurately reflect seniors’ financial needs because it tracks younger workers, while retirees tend to face higher costs for health care, housing and some other items. Seniors on Medicare, the health insurance program for those over 65, spend 13.6% of their income on health-related expenses, more than double that of younger people, according to KFF.
Meanwhile, poverty is on the rise among America’s seniors, with the poverty rate among seniors rising to 15% last year, up from 14% in 2023, the highest among all age groups, according to recent Census data. The AARP said more older adults are struggling with the rising cost of housing and utility costs.
“Most Social Security beneficiaries aren’t working — you are on a fixed income, so any inflation increase you feel,” Jones said. “If the increases continue, it becomes difficult to figure out how you’re going to pay for all of your monthly expenses.”
How Medicare costs could impact benefits
Advocates for senior citizens say the COLA is likely to fall short, especially given forecasts for increases in Medicare’s premiums and deductibles for 2026. The Medicare premium is taken directly from seniors’ Social Security checks.
While Medicare hasn’t yet announced its 2026 premiums, its trustees report issued earlier this year projected that the standard monthly premium for Part B — which covers doctors visits and outpatient care — would likely rise to $206.50, or a 12% boost from its current rate. Deductibles are also projected to rise about 12% next year, the report said.
The result: Seniors could see most of their 2026 COLA eaten up by higher Medicare costs, the National Council on Aging said in a statement.
“COLA might reflect the inflation rate, but it is woefully insufficient for older Americans who already have high health care costs and are facing even greater increases in their Medicare costs in 2026,” Ramsey Alwin, CEO of the NCA, said in the statement.
Seniors are likely to be disappointed by the 2026 COLA, which represents the second-smallest bump since 2021. Many are at risk of falling behind, according to the National Committee to Preserve Social Security and Medicare, an advocacy group.
The Consumer Price Index for September, also released on Friday, showed that medical and elderly care costs are surpassing the 3% annualized pace of inflation. Costs for caring for the elderly at home jumped 11.6% last month on an annual basis, while medical services rose 3.9%.
“Seniors on fixed incomes are rightly concerned that the Social Security COLA is not keeping pace with the true impact of inflation on their living costs, especially in areas where prices are soaring. Medical, housing and grocery costs are outstripping the COLA,” Max Richtman, the group’s CEO, said in a statement.
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