It was a unique year because Social Security’s cost-of-living adjustment (COLA) was delayed by nine days due to the federal government shutdown.
in 2026 Social Security benefits will increase by 2.8 percent, marking the fifth year in a row that recipients have seen a year-over-year increase of at least 2.5 percent.
But soaring costs that are important to elderly Social Security recipients could offset some or all of their increases in the new year.
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Social Security’s more than 70 million traditional beneficiaries expect little more than a cost-of-living adjustment (COLA) in annual reports.
Social Security’s COLA helps beneficiaries fight inflation. If benefits were not adjusted almost annually to reflect rising prices of goods and services, the purchasing power of Social Security income would decline over time.
Typically, beneficiaries would have known exactly how much their monthly checks would increase in the new year more than a week in advance. But this was no ordinary year. The ongoing federal government shutdown has delayed key economic data, including September. submission of inflation report. The number in this report is the final piece of the puzzle needed to calculate Social Security’s 2026 benefits. COLA.
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This morning (October 24th) at 08:30 ET, the US Bureau of Labor Statistics released the September inflation report nine days later than originally planned, paving the way for the Social Security Administration (SSA) to announce “raises” for the coming year, which the administration soon did.
Due to a small Trump hit, Social Security benefits in 2026 will officially increase by 2.8 percent.
On paper, the 2.8% increase may not be significant. But when considered alongside COLA beneficiaries in recent years, it’s historic.
US headline inflation rises to 9.1% in 2022 following the largest ever increase in US M2 money supply during the COVID-19 pandemic. With COLAs designed to help recipients keep up with rising prices, the increases were 5.9%, 8.2% and 2%, 2%, 2.2%, respectively. Accordingly, in 2025 8.7% increase in 2023 was the highest percentage in 41 years.
Although the 2.8% payout increase in 2026 percentage will not match 2022, 2023 or 2024, which is the fifth year in a row that recipients have received at least a 2.5% COLA increase. The last time this happened was between 1988 and 1997, when COLAs ranged from 2.6% to 5.4%.
Next year’s benefit increase is also slightly higher than the 2.3% average COLA since 2010.
But it’s one thing for the SSA to give you a percentage, and quite another to figure out how much that percentage will increase your Social Security payment in dollars.
According to the SSA’s most recent monthly statistical review covering benefits in 2025. in August (timely Social Security data was also negatively impacted by the government shutdown), more than 76% of all beneficiaries were retired workers.
On average, approximately 53.3 million retirees receiving monthly benefits took home $2,008.31 in August. After this morning’s COLA announcement, the average retired worker beneficiary’s monthly income from the program will increase by $56.23 in 2026. to nearly $2,065.
Meanwhile, nearly 7.1 million workers with long-term disabilities received an average Social Security check of $1,582.95 in August. Next year’s COLA will increase this typical benefit by $44.32 per month.
Finally, the average survivor beneficiary took home $1,575.30 in August. The newly announced increase for the new year will increase this average monthly payment by $44.11.
Unfortunately, the historic 2026 a program payout is not necessarily good news for all beneficiaries. While everyone likes to see their monthly payment grow from one year to the next, it’s not so nice if the increase you get doesn’t reflect the inflationary pressures you’re facing.
More often than not, Social Security’s COLA ends up being insufficient for the elderly beneficiaries the program is designed to protect.
For example, in 2024 in december 87% of Social Security’s regular beneficiaries (retired workers, disabled workers, and survivors) were 62 or older. However, the inflation index used to track price changes and calculate the program’s annual COLAs is the Consumer Price Index for Urban Wage Earners (CPI).
As the name suggests, the CPI-W is about “urban wage and office workers,” who are typically younger than age 62, don’t currently receive Social Security benefits, and spend money differently than retirees.
Compared to retirees under the age of 62, a higher proportion of their monthly budget is spent on shelter and medical care services. The trailing 12-month rate of inflation for both of these costs is currently higher than the 2026 COLA. In other words, it shows that the purchasing power of retirees will decrease from their Social Security income.
The next year could also be tough for two students, current Social Security recipients who are enrolled in traditional Medicare.
Based on 2025 According to mid-June estimates in the Medicare Trustees report, the Part B premium in 2026 is projected to will increase 11.5% from $185/month to $206.20/month. A double-digit percentage premium increase in the segment that includes outpatient services will offset some or all of next year’s COLA.
In short, today’s historic COLA announcement should be taken with a grain of salt by most retirees.
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Social Security 2026 The Cost of Living Adjustment (COLA) announcement is out — here’s exactly how much extra you’ll get next year, originally published by The Motley Fool
