Social Security beneficiaries will get a 2.8 percent increase in their monthly payments next year, the Social Security Administration (SSA) announced on Oct. 24.
The 2026 cost-of-living adjustment (COLA) is slightly higher than last year’s 2.5 percent increase, reflecting a recent uptick in inflation.
The 2.8 percent COLA will boost the average monthly benefit for a retired worker by about $56, from $2,015 to $2,071, according to SSA estimates. The average monthly survivor benefit would inch up by about $52, and the average payment for a worker collecting Social Security Disability Insurance would go up by $44.
The COLA announcement, initially scheduled for Oct. 15, was delayed by nine days due to the federal government shutdown. However, the bump in benefits will take effect on time, starting with December Social Security payments, which are issued in January.
The annual COLA “plays a crucial role in supporting older Americans, helping ensure retirement income keeps pace with inflation,” Dr. Myechia Minter-Jordan, AARP’s chief executive officer, said in a statement.
Reflecting persistent inflation, 2026 will be the fifth straight year with a COLA of at least 2.5 percent, the longest such streak since the 1990s.
“Over the past year, many older Americans have been financially squeezed, and Social Security is an important key to their financial health,” Minter-Jordan said. “AARP has fought for Social Security for decades — including to protect the COLA from those who wanted to make cuts.”
COLA follows inflation — with a lag
Rob Williams, managing director of financial planning at Charles Schwab, says Social Security recipients will welcome the boost, even though many may feel it should be higher.
“Inflation has been a top concern, both emotionally and financially, for a lot of Americans, retirees included,” Williams says. “It feels like everything is getting more expensive.”
Lucy Haverfield, a 72-year-old retiree living in Florida, says she lives on a “razor-thin” margin with her $2,500 monthly Social Security payment, her only income. “Milk, eggs, bread, gas, name something — everything is up,” she says.
“I appreciate that they are doing something,” Haverfield says of the COLA increase. “Is it what we really need? [For] those of us on a fixed income, I’d say no.”
Annual COLAs are based on year-over-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year.
The CPI-W measures price trends for a market basket of goods and services, such as food, clothing, housing and transportation. It’s a subset of the overall Consumer Price Index, the federal government’s main gauge of inflation.
In 2025, the CPI-W rose by 2.9 percent in September, 2.8 percent in August and 2.5 percent in July, compared with the previous year, according to data from the federal Bureau of Labor Statistics.
Because one year’s COLA reflects the prior year’s price trends, there can be a delay in the impact on retirees’ bank accounts. For example, 2022’s 5.9 percent increase was outpaced by that year’s inflation, which reached 9 percent. That resulted in an 8.7 percent COLA for 2023, a year when inflation ebbed to 3.4 percent by December.
So, if the inflation rate next year dips below the 2.8 percent COLA level, the COLA goes further to protect beneficiaries’ buying power in 2026. However, some economists expect inflation to keep inching up, driven in part by higher tariffs on imported goods.
The Supreme Court has agreed to hear a case challenging the legality of the tariffs imposed by President Donald Trump. If the tariffs remain in place, that could have an impact on prices for a wide range of goods, from cars to home construction to toys.
Already, price increases caused by tariffs are “beginning to show up more noticeably” in the economy, says Gary Schlossberg, a global strategist with the Wells Fargo Investment Institute.
The Federal Reserve’s Survey of Professional Forecasters is projecting that the main Consumer Price Index will rise by 2.6 percent through the first half of next year.
Housing, utility and insurance costs bite
For some goods and services, such as housing and insurance, prices have risen at a faster clip than overall inflation, putting a financial squeeze on older adults who rely primarily on Social Security for their retirement income.
For example, the insurance marketplace Insurify projected in June that homeowner’s insurance costs will climb 8 percent this year, compared with 2024 rates, and tariffs could add another three percentage points to that hike because premiums reflect the rising cost of materials used for rebuilding.
“Rising home insurance costs are particularly hard on older adults, who are often out of the workforce and don’t have a path to increase their income,” says Matt Brannon, a data journalist at Insurify. “Many older homeowners paid off their mortgages in an effort to stabilize their housing costs and now find their home insurance premiums rising rapidly, especially if they live in a disaster-prone area.”