Social Security COLA to rise by 2.8%

The Social Security cost-of-living adjustment will be 2.8% in 2026, the Social Security Administration said today. Social Security benefits will increase by an average of $56 monthly beginning in January.

The 2026 COLA will be slightly higher than the average over the past 20 years, according to The Senior Citizens League, a nonpartisan group. COLAs have averaged about 2.6% a year over the past two decades. A notable exception was in 2023, when record inflation pushed the COLA to 8.7%. The COLA for 2025 was 2.5%.

High inflation in the 1980s led to high COLAs, with Social Security monthly benefits increasing by more than 14% in 1981, followed by a COLA of 11.2% the next year.

The Social Security cost-of-living adjustment is based a subset of the consumer price index, formally known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

The COLA is the percentage increase in the CPI-W from the third quarter of the previous year to the third quarter of the current year.

How does Part B impact Social Security?

The news of the Social Security COLA is only one factor affecting how much money retirees will see from the program every month. Medicare Part B premiums are typically deducted directly from recipients’ benefit checks.

The Part B premium increase for 2026 has not yet been announced, but projections from Medicare trustees indicate that the standard monthly Part B premium could go up by 11.6% — or $21.50 per month — to $206.50 per month from $185. Higher earners may pay additional monthly costs, known as income-related monthly adjustment amounts, or IRMAA.

The annual COLA is not designed to make retirees richer, but to enable them to break even, said Kim Scouller, financial professional with World Financial Group, told InsuranceNewsNet.

"The COLA increase is a lifeline for retirees and anyone on a fixed income,” Scouller said. “But it’s not designed to make retirees richer — it’s designed to help them stay even. With inflation still sticky in essentials like food, utilities and insurance, retirees must know how to make every increase count.

“Even if your income goes up a few percent, inflation compounds quietly every year — working against you the same way compound interest works for you. For example, at 6% inflation, your dollar loses half its value in about 12 years. That’s why those who plan ahead — through budgeting, diversified savings and inflation-resistant investments — can protect their independence and confidence in retirement.”

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