The cost of living does not stay the same over time, and thankfully, neither does the amount of Social Security payments. To reflect increasing costs due to inflation and other economic factors, the Social Security Administration (SSA) regularly reviews its calculations for Social Security retirement benefits as well as Social Security Disability Insurance (SSDI) payments and Supplemental Security Income (SSI) payments. This update is what is officially known as a cost-of-living adjustment (COLA).
Effectively, the aim of these annual adjustments is to "ensure that your purchasing power remains the same even when prices rise due to inflation," said Bankrate. How much of an adjustment is required for that to happen each year, however, can vary widely.
What is the COLA for 2026?
For 2026, the cost-of-living adjustment is 2.8%. As a result, the average retiree will receive an additional $56 a month, increasing the average monthly check from $2,015 in 2025 to $2,071. Whether or not this will be enough of an increase for retirees is up for debate.
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One expert, Martha Shedden, the co-founder of the National Association of Registered Social Security Analysts, described the increase as "'modest, especially for retirees whose cost increases may be higher in areas such as health care, housing or other retirement-specific expenses,'" said Kiplinger.
Meanwhile, David Payne, an economist for The Kiplinger Letter, said to Kiplinger: "With current inflation at 3%, and inflation next year a bit less, the COLA should help seniors mostly keep up."
How much does Social Security usually increase each year?
For context, the "2.8% 2026 COLA is higher than 2025's 2.5% COLA, but still lower than the average COLA of 3.7% since it became an annual occurrence in 1975," said The Motley Fool, a personal finance blog. But when looking at averages over just the past decade, the COLA for 2026 is "right on track" — although, "according to The Senior Citizens League, the purchasing power of Social Security benefits has declined by 20% since 2010," said the outlet.
It is also worth noting that while the SSA will review the data each year to weigh a cost-of-living increase, there is "no guarantee of an increase in any given year," said the AARP. In fact, the "amount of the increase can vary greatly from year to year," ranging from 0% all the way up to 14.3% over the period since COLAs began in 1975.
How is COLA calculated?
The SSA is responsible for calculating cost-of-living adjustments and then applying them to people's benefit payments. Its COLA calculation hinges on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is a "monthly inflation metric published by the Bureau of Labor Statistics that tracks changes in prices for common goods and services," said The Motley Fool.
To determine if a COLA is necessary and by how much, the SSA compares the CPI-W for the third quarter of the current year with the third quarter of the last year. Increases in the average CPI-W between those periods lead to an increase in benefits, while minimal or no change, or even a decrease, results in no adjustments being made.
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