WASHINGTON (AP) — The Social Security Administration’s annual cost of living adjustment will rise 2.8% in 2026, an average increase of more than $56 a month for retirees, agency officials said Friday.
The benefit increase for nearly 71 million Social Security recipients will take effect in January. And on December 31, increased payments will begin to go to nearly 7.5 million people receiving Supplemental Security Income.
Friday’s announcement was supposed to come last week but was delayed due to the federal government shutdown.
The cost of living adjustment (COLA) for retirees and disability beneficiaries is funded by payroll taxes levied on employees and their employers up to a certain annual salary, set to increase from $176,100 in 2025 to $184,500 in 2026.
Recipients received a 2.5% cost-of-living increase in 2025 and a 3.2% increase in benefits in 2024, following a historic 8.7% increase in benefits in 2023 caused by record-breaking 40-year inflation.
The smaller increase for 2026 reflects easing inflation. The agency will notify recipients of their modern benefit amount by mail in early December.
Some seniors say the increase isn’t enough
Some seniors say cost of living adjustments won’t significantly improve their ability to pay their daily expenses. Linda Deas, an 80-year-old resident of Florence, South Carolina, said, “It doesn’t fit the affordability crisis we have right now.”
Deas, a retired information systems and network operations specialist, moved from New York to South Carolina in 2022 to be closer to family. She says her monthly rent has increased by $400 in the last two years.
She listed other items that have become more steep for her over the past two years, including car insurance and groceries. “If you’ve been to the supermarkets recently you’ll notice that prices are going up, not down,” she said.
Deas isn’t the only one who feels costs are spiraling out of control. AARP surveys show that older Americans are increasingly struggling to keep up in today’s economy. The poll says only 22% of Americans over 50 believe a COLA of about 3% for Social Security recipients is enough to keep up with rising prices, while 77% disagree. According to AARP, this sentiment is consistent across all political party affiliations.
In Deas’ case, the MIT Living Wage Calculator estimates that an adult living alone in Florence, South Carolina, would spend $10,184 per year on housing, $3,053 on medical expenses and $3,839 on groceries.
AARP CEO Myechia Minter-Jordan said the COLA is “a lifeline of independence and dignity for tens of millions of older Americans,” but despite annual increases in income driven by inflation, “older adults still face challenges covering basic costs.”
Social Security Administration Commissioner Frank Bisignano said in a statement Friday that the annual cost of living adjustment is “one way we ensure benefits reflect today’s economic realities and continue to provide a foundation of security.”
Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center, said in a statement that rising living costs “cannot solve all of the financial challenges facing households or all of the program’s shortcomings.”
The agency has been in turmoil in recent months
The latest COLA announcement comes as the Social Security Administration has endured nearly a year of turmoil, including laying off thousands of workers as part of the Trump administration’s effort to reduce the size of the federal workforce. Trump administration officials also made statements they later walked back that raised concerns about the future of the program.
Treasury Secretary Scott Bessent said in July that the Republican administration was committed to protecting Social Security, hours after he said in an interview that a modern child savings program enacted by President Donald Trump was “a back door to privatizing Social Security.”
And in September, Bisignano had to walk back comments that the agency was considering raising the retirement age to bolster Social Security. “Raising the retirement age is not currently being considered by the government,” Bisignano said in an emailed statement to The Associated Press at the time.
“I think everything is being considered and will be considered,” Bisignano said in the statement when asked whether raising the retirement age was a way to maintain the solvency of the retirement program.
Efforts to increase benefits for seniors
Additionally, the Social Security Administration faces imminent bankruptcy if it is not addressed by Congress. The June 2025 report from the Social Security and Medicare Trustees said that starting in 2034, the Social Security trust funds that cover aging and disability recipients will no longer be able to pay full benefits. Then Social Security would only be able to pay 81% of benefits.
The last reform of Social Security benefits came about 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67.
While a indefinite solution to strengthen the benefits program has not yet been signed into law, both the Trump and Biden administrations recently signed into law modern benefits for retirees that are expected to improve their finances.
As part of the Republican tax and spending bill, the Trump administration gave many seniors tax relief through a momentary tax deduction for seniors age 65 and older that applies to all income – not just Social Security. However, those who cannot claim the deduction include the lowest-income seniors who already pay no Social Security taxes, those who plan to claim their benefits before age 65, and those above a set income limit.
Additionally, in 2024, former President Joe Biden repealed two federal policies — the Windfall Elimination Provision and the Government Pension Offset — that previously capped Social Security payments for about 2.8 million people, mostly former federal employees.
These actions accelerated the retirement program’s insolvency.
Sprick of the Bipartisan Policy Center said, “There have long been questions about whether benefits are adequate for low-income seniors, which should urge policymakers to work toward broader reforms rather than ignoring Social Security’s long-term solvency.”
___
Follow AP’s coverage of the U.S. Social Security Administration at https://apnews.com/hub/us-social-security-administration.
