As analyzed by The Hill, millions of Americans receiving Social Security benefits will witness an increase in their payments in 2026 due to the annual Cost-of-Living Adjustment (COLA). The COLA is meant to help keep Social Security benefits up with inflation, so retirees, disabled people, and other beneficiaries can maintain their purchasing power as the cost of living outruns them. Here’s what you need to know about the 2026 Social Security COLA increase: How It’s Calculated? What does this mean for your benefits? Why does it matter?
What is COLA?
COLA stands for cost-of-living adjustment. It’s an annual adjustment to Social Security benefits to help keep them in line with inflation. The increase is linked with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the costs of goods and services like food, housing, transportation, and healthcare.
The Social Security Administration (SSA) announces the cost-of-living adjustment, or COLA, every October, and the increased benefits take effect in January of the following year. The adjustment that will be made effective in 2026, for instance, will be announced in October 2025. It will be applied to benefits payable in January 2026.
How is COLA Calculated?
The average CPI-W for the third quarter of the current year (July, August, and September) compared to the average CPI-W for the third quarter of the previous year determines the COLA. When there is an increase, Social Security benefits are adjusted upward by the same percentage.
So if the CPI-W average increases by 3% from 2024 to 2025, the 2026 COLA is 3%. Thus, a retiree who received $1,500 a month in 2025 would receive $1,545 a month in 2026.
What’s the COLA for 2026?
The actual cost-of-living adjustment for 2026 will not be announced until October 2025, but actuaries predict an increase of roughly 2.5 percent to 3.5 percent, based on prevailing inflation trends. This estimate could vary depending on economic conditions such as fluctuations in gas, housing, and health care costs.
For context: the COLA for 2024 was 3.2%, and the projected COLA for 2025 is about 2.8%. These increases also are a byproduct of inflation and the rising cost of living.
How the 2026 COLA Will Affect Your Benefits
The deadline COLA will increase the size of your check for Social Security each month. Here’s one way it could work:
If you receive, say, $1,800 a month in 2025 and there is a 3 percent cost-of-living adjustment, your monthly benefit will increase to $1,854 in 2026.
That little extra money can be used to cover the rising prices of necessities — things like groceries, utilities, and medical care. But since the COLA isn’t some bonus or raise — it’s just an adjustment aimed at keeping your benefits from getting Gilliard-ed by inflation — know that the actual dollar figures will differ from one person to another, based on the calculation behind your benefits.
Why is COLA Important?
For beneficiaries of Social Security, COLA matters because it helps preserve their purchasing power. Without COLA, Social Security benefits would lose value over time as prices rise. As Social Security is the most prominent source of income for most retirees, even a small increase can dramatically improve their quality of life.
However, some critics argue that the current COLA formula doesn’t accurately capture everything seniors have to pay — especially healthcare, which costs keep climbing faster than for the general population. Others, however, call for switching to another measure, such as the Consumer Price Index for the Elderly (CPI-E), which tracks the spending patterns of older adults.
What else do you need to know about COLA?
Medicare premiums: While the COLA increases your Social Security benefits, Medicare Part B premiums are deducted from your payments. If your premiums go up, they can eat any PART or all if your COLA increases.
Taxes: Your benefits from Social Security might be taxable at the federal level, based on your income. Additional benefits can push you into a higher tax bracket.
State Taxes: A few states tax Social Security benefits, too, so check state rules to learn how the COLA might affect you.
Preparing for the 2026 COLA
While the 2026 COLA will provide a nice boost to your benefits, it pays to take action now to get the largest possible raise. Here are some tips:
Review Your Budget: Take a hard look at your spending and decide where the extra cash will have the most impact.
Save for Medical Costs: Healthcare is one of the biggest costs for seniors, so you may want to set aside some of your new increase for your medical expenses.
Start Making Debt Payments: Do you have existing debts to pay off? Use the extra cash to make quick payments on it.
What To Do With Your Money You Should Save or Invest: If you do not require the money right away, save or invest it.
Conclusion
The Social Security 2026 COLA (Cost Of Living Adjustment) is a stipend that enables millions of Americans to improve their lives in an economically rising world. The precise figure won’t be available until October 2025, but economists predict an increase between about 2.5 and 3.5 percent. This increase will be a welcome reprieve for retirees, disabled people, and other beneficiaries who rely on Social Security.
