Retirees who are still feeling the pinch of inflation might feel let down by the Oct. 24 Social Security COLA announcement.
The cost-of-living adjustment (COLA) for the new year will be only modestly bigger than the COLA for 2025.
After a 2.5% increase in their benefits this year — which followed a 3.2% increase for 2024 — retirees will see a 2.8% bump in the new year.
Read on to find out what this means for monthly Social Security benefit payments, when retirees will start receiving the bigger payments and more.
What the COLA means for the average payment
The average retired worker’s Social Security payment of $2,015 per month will be $2,071 after the COLA for 2026 takes effect, according to federal estimates. That’s an additional $56 each month.
The average retired couple’s collective payment of $3,120 per month will be an estimated $3,208. That’s an extra $88 in total each month for two people.
The average payment for a widowed person without children, which is currently $1,867 per month, will be an estimated $1,919, which is an increase of $52.
When the COLA takes effect
The 2026 COLA will take effect in January for about 71 million recipients of Social Security benefits.
It will take effect on Dec. 31 for about 7.5 million recipients of Supplemental Security Income (SSI) benefits — which are income supplements for people who are elderly, blind or disabled, and who have little to no income.
How the new COLA compares
For context, the COLAs for the past decade were:
- 2025 — 2.5%
- 2024 — 3.2%
- 2023 — 8.7%
- 2022 — 5.9%
- 2021 — 1.3%
- 2020 — 1.6%
- 2019 — 2.8%
- 2018 — 2.0%
- 2017 — 0.3%
- 2016 — 0% (no adjustment)
For a deep dive into how this rate has changed over time, check out “Here’s the Social Security COLA the Year You Were Born.”
What is a COLA?
Cost-of-living adjustments are meant to counteract the effect of inflation. As the Social Security Administration describes it:
“The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation.”
By law, Social Security COLAs are tied to the federal government’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year — specifically, the change in the index since the same period of the prior year.
If the CPI-W shows no average change over those four quarters, or if it decreases, there is no Social Security COLA for the next year.
The index is one of the government’s gauges of inflation. The Federal Bureau of Labor Statistics defines it as “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.”
Why the COLA system has critics
Critics argue that it’s unfair to tie Social Security retirement benefits to the CPI-W because it’s based on costs that workers commonly incur — which can differ significantly from costs that retirees face.
In fact, an analysis by the Senior Citizens League found that Social Security retirement benefits lost 20% of their purchasing power from 2010 to 2024. This is due to retirees’ expenses increasing faster than Social Security COLAs, according to the advocacy group.
Currently, the annual inflation rate stands at 3.0%.
Why the new COLA could seem even smaller
When Social Security recipients also have Medicare health insurance, their Medicare Part B premium generally is deducted from their Social Security payments. (Part B is the component of Medicare that covers doctor visits and other outpatient services.)
So, if a rise in the COLA coincides with a rise in the Part B premium — as was the case for 2025 — the premium increase essentially cancels out part or all of the COLA.
The government has yet to announce the Part B premium for 2026, but Part B increases have outpaced COLA increases in recent decades. An analysis by the Center for Retirement Research at Boston College found that between 2000 and 2020, the average annual Part B premium increase was 5.9% while the average annual Social Security COLA was only 2.2%.
In December, the government will notify Social Security recipients of the exact amount of their 2026 COLA after Part B premiums are deducted. It will mail the notice and also send a digital copy to beneficiaries via their online Social Security account.
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