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Social Security COLA for 2026: 2.8% Increase Explained

Updated: Oct 26

Author: Donna LeValley

Published: 5:15 PM EAT, October 24, 2025

Updated: 5:54 PM EAT, October 24, 2025


WASHINGTON — On Friday, October 24, 2025, the Social Security Administration (SSA) announced a 2.8% Cost-of-Living Adjustment (COLA) for 2026, marking one of the smallest increases since 2020.


Delayed from its scheduled October 15 release due to a government shutdown, this adjustment will raise the average retiree’s monthly benefit by $56, from $2,015 in 2025 to $2,071. For married couples, the average monthly benefit will increase by $88, from $3,120 to $3,208. The SSA also updated the 2026 taxable wage cap and earnings requirements for Social Security credits, reflecting inflation-driven changes. Here’s everything you need to know about the 2026 COLA and its implications.


Social Security COLA

Understanding the 2026 COLA

The 2.8% COLA, slightly higher than 2025’s 2.5%, aligns closely with the 20-year historical average of 2.6%. It aims to help beneficiaries maintain purchasing power amid rising costs. The adjustment applies to retirement, disability, and survivor benefits, impacting over 70 million Americans. The SSA calculates the COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), comparing the third-quarter average of 2025 (317.265) to 2024 (308.729). The formula is:

(317.265 - 308.729) / 308.729 × 100 = 2.8%

Month

2024 CPI-W

2025 CPI-W

July

308.501

316.349

August

308.640

317.306

September

309.046

318.139

Average

308.729

317.265

The announcement was delayed because the government shutdown affected the Bureau of Labor Statistics (BLS), which compiles the CPI data. Recalled BLS employees prioritized the September CPI release on October 24 to enable the COLA calculation.



Historical Context

The COLA has varied significantly over the years, reflecting economic conditions:

Year

COLA

Avg. Monthly Benefit

2016

0.0%

$1,360.13

2017

0.3%

$1,404.15

2018

2.0%

$1,461.31

2019

2.8%

$1,502.85

2020

1.6%

$1,544.15

2021

1.3%

$1,658.03

2022

5.9%

$1,825.14

2023

8.7%

$1,905.31

2024

3.2%

$1,907

2025

2.5%

$1,976

2026

2.8%

$2,071

The 2023 spike (8.7%) addressed post-COVID inflation, while 2016’s 0.0% reflected low inflation. The 2026 COLA, while modest, ensures benefits keep pace with moderate inflation.


Why CPI-W and Not CPI-E?

The SSA uses CPI-W, which tracks costs for urban wage earners and clerical workers, rather than the Consumer Price Index for the Elderly (CPI-E), which some advocate for as it emphasizes costs like healthcare, more relevant to seniors.


Critics argue CPI-W underestimates seniors’ expenses, but proposals to switch to CPI-E have stalled in Congress due to concerns about its applicability to non-retiree beneficiaries (e.g., disability recipients). The COLA provision, enacted in 1972 and effective since 1975, replaced ad-hoc Congressional benefit increases to address rapid inflation’s erosion of fixed pensions.


Impact on Beneficiaries

The 2.8% increase translates to:

  • Retirees: An extra $56/month, raising the average benefit to $2,071.

  • Married Couples: An additional $88/month, increasing benefits to $3,208.

  • Disabled Workers: Similar proportional increases apply, with average benefits varying by disability type.

  • Survivors: Widows/widowers and dependent children also see adjusted benefits.


While the increase helps, some beneficiaries may find it insufficient against rising costs, especially for healthcare. The SSA encourages checking benefit details via my Social Security accounts.


Earnings Test for 2026

For those claiming benefits before full retirement age (FRA) while working, the 2026 earnings test applies:

  • Under FRA: Earnings above $24,480/year ($2,040/month) reduce benefits by $1 for every $2 earned over the limit.

  • Year of FRA: Earnings above $65,160/year ($5,430/month) reduce benefits by $1 for every $3 earned over the limit.

  • Benefits withheld are later recalculated at FRA to restore some reductions.


Social Security Tax Wage Cap

The 2026 taxable wage cap rises to $184,500, up $8,400 from $176,100 in 2025. This cap limits the income subject to Social Security taxes (6.2% for employees and employers) and used in benefit calculations. Higher earners benefit from increased credits, but only income up to this cap counts.


Earning Social Security Credits

To qualify for retirement or disability benefits, workers need 40 credits (up to 4 per year). In 2026:

  • One Credit: $1,890 in wages or self-employment income (up from $1,810 in 2025).

  • Four Credits: $7,560 annually. This threshold, adjusted for inflation, ensures eligibility for benefits, including Medicare and survivor benefits.


Maximizing Your Benefits

To increase monthly Social Security payments:

  • Delay Claiming: Waiting until age 70 boosts benefits by 8% per year past FRA (up to 28% higher for those born in 1960 or later). Claiming at 62 reduces benefits by 30% and spousal benefits by 35%.

  • Use Retirement Savings: A “Social Security bridge” using IRA or 401(k) funds can delay claiming, minimizing penalties and increasing payouts.

  • Work Longer: Earning more credits at higher wages can raise your benefit calculation, based on your 35 highest-earning years.


Common Questions

  • When will I see the increase? The 2.8% COLA takes effect with January 2026 payments, typically delivered mid-month.

  • Does COLA apply to all benefits? Yes, it covers retirement, disability, and survivor benefits.

  • Why was the announcement delayed? A government shutdown disrupted BLS data collection, but recalled staff finalized the CPI-W on October 24.

  • Can I appeal my benefit amount? You can request a review via the SSA if you believe your benefit calculation is incorrect.


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