Social Security’s cost of living increase will rise 2.8% in 2026, agency officials said Friday, which translates to an average increase of more than $56 for retirees each month.
The increase in benefits for nearly 71 million Social Security beneficiaries will take effect starting in January. Increased payments to approximately 7.5 million people receiving Supplemental Security Income will begin on December 31.
The announcement was supposed to be made Friday last week but was postponed due to the federal government shutdown.
The cost of living adjustment, or COLA, for retirees and disability beneficiaries is funded by payroll taxes collected from workers and employers, up to a certain annual salary, and is scheduled to rise to $184,500 in 2026, from $176,100 in 2025.
Beneficiaries received a 2.5% cost-of-living increase in 2025 and a 3.2% increase in their benefits in 2024, after a historically large 8.7% increase in benefits in 2023, due to record inflation at a 40-year high.
The smaller increase for 2026 reflects moderation in inflation.
The annual cost-of-living adjustment “is one way we are working to ensure that benefits reflect today’s economic realities and continue to provide a foundation for security,” Social Security Administration Commissioner Frank Bisignano said in a statement Friday.
Cost-of-living increases “cannot solve all of the financial challenges families face or all of the program’s shortcomings,” Emerson Sprick, director of retirement and labor policy at the bipartisan Policy Center, said in a statement.
COLA’s latest announcement comes as the Social Security Administration has been going through nearly a year of turmoil, including the termination of thousands of workers as part of the Trump administration’s efforts to shrink the size of the federal workforce. Trump administration officials also made statements that they later retracted, raising concerns about the future of the program.
Treasury Secretary Scott Besent said in July that the Republican administration was committed to protecting Social Security, hours after he said in an interview that the new children’s savings program that President Donald Trump signed into law “is a backdoor to privatize Social Security.”
In September, Bisignano was forced to retract his statements that the agency was considering raising the retirement age to support Social Security. “Raising the retirement age is not currently under consideration by the administration,” Bisignano said at the time in an emailed statement to The Associated Press.
“I think everything is under consideration, and will be considered,” Bisignano said in the statement when asked whether raising the retirement age is a possibility to preserve the solvency of the aging program.
Additionally, the Social Security Administration faces an imminent bankruptcy date if Congress does not address it. The June 2025 Social Security and Medicare Trustees Report indicates that Social Security’s trust funds, which cover old-age and disability beneficiaries, will not be able to pay full benefits starting in 2034. After that, Social Security will only be able to pay 81% of benefits.
Social Security benefits were last reformed nearly 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67.
Copyright © 2025 The Associated Press. All rights reserved.