With the cost of living continuing to rise, Social Security recipients can expect some relief in 2026. The Social Security Administration (SSA) is set to announce its annual cost-of-living adjustment (COLA) in mid-October, and early forecasts suggest a 2.7% increase for beneficiaries next year. This increase, while modest, will have a meaningful impact on retirees’ monthly benefits, providing a bit of extra cushion amid inflationary pressures.
The COLA is an essential safeguard for Social Security recipients, designed to ensure that their purchasing power doesn’t erode due to inflation. According to the Social Security Administration, this year’s adjustment will help retirees keep up with rising costs, but it’s also part of a broader trend of relatively steady, modest increases in recent years.
What is COLA, and Why Does it Matter?
The COLA, or cost-of-living adjustment, is a yearly increase in Social Security benefits aimed at keeping pace with inflation. Tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the COLA ensures that Social Security payments reflect changes in the cost of living, primarily for goods and services. Since its introduction in 1975, COLA has been an important tool for protecting beneficiaries’ purchasing power.
According to The Senior Citizens League, the 2.7% forecast for 2026 is based on the inflation data available through the third quarter of 2025. This increase is slightly higher than the 2.5% COLA retirees received in 2025, reflecting a small uptick in inflation. As a result, the average retired worker will see an additional $54 per month in benefits, a boost that may seem small but can add up over the course of the year. For retirees, particularly those living on fixed incomes, even modest increases like this can help ease the strain of higher prices at the grocery store or the pharmacy.
Breakdown of the COLA Impact by Age Group
The financial benefit of a 2.7% COLA varies depending on when beneficiaries begin receiving Social Security. Those who begin at age 62—at the earliest eligibility age—will see a smaller increase in their monthly benefits compared to those who claim later. For example, someone who starts collecting Social Security at age 62 would see their monthly benefit rise from $1,377 to $1,414, an increase of $37. In contrast, someone who waits until age 70 to claim would see a larger increase, from $2,188 to $2,247, a $59 monthly boost.
The benefit increase also varies by individual earnings history, as Social Security payments are based on lifetime earnings. The higher the earnings, the larger the benefit. This is why the increase may look larger for beneficiaries in their 70s and early 80s compared to those in their early 60s.
While retirees continue to grapple with inflation and rising healthcare costs, these small adjustments to Social Security benefits provide a critical safety net. According to experts, however, the increase might not be enough to fully offset the impact of inflation, leaving many seniors still feeling the pinch. Nonetheless, the 2.7% COLA is expected to make a meaningful difference for millions of Americans who depend on Social Security for a significant portion of their income.
