Social Security COLA 2026: Payments rise 2.8% as inflation declines

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 made on Friday It was supposed to be done last week But it was delayed because Federal government shutdown.

Cost of living adjustmentor COLA, for retirees and beneficiaries with disabilities is funded by payroll taxes collected from workers and employers, up to a certain annual salary, which is scheduled to rise to $184,500 in 2026, from $176,100 in 2025.

Recipients have been received Increase the cost of living by 2.5% in 2025 and A 3.2% increase in its benefits In 2024, after a major historical decline Interest increase 8.7% In 2023, setting a record The highest levels of inflation in 40 years.

The smaller increase for 2026 reflects moderation in inflation. The agency will notify beneficiaries of their new benefit amount by mail in early December.

Some elderly people say that the increase is not enough

Some seniors say a cost-of-living adjustment won’t help much with their ability to pay their daily expenses. “It doesn’t fit into the affordability crisis we’re facing right now,” said Linda Dias, 80, a resident of Florence, South Carolina.

Dias, a retired information systems network operations specialist, moved to South Carolina from New York in 2022 to be closer to family. She says her monthly rent has increased by $400 in the past two years.

She listed other things that have become more expensive for her over the past two years, including car insurance and food. “If you go to supermarkets recently, you will notice how prices are going up, not down,” she said.

Dias is not alone in feeling that costs are getting out of control. An AARP poll shows that older Americans are increasingly struggling to keep up with today’s economy. The poll indicates that only 22% of Americans over 50 agree that a COLA of about 3% for Social Security recipients is enough to keep up with rising rates, while 77% disagree. This sentiment is consistent across political party affiliations, according to AARP.

In Dias’ case, the MIT Living Wage Calculator estimates that an adult living alone in Florence, South Carolina, would spend annually $10,184 for housing, $3,053 for medical expenses, and $3,839 for food.

Misiah Minter Jordan, CEO of AARP, said COLA is “a lifeline of independence and dignity for tens of millions of older Americans,” but even with… Enhancing inflation measurementIn income, “older people still face challenges in covering basic expenses.”

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.

The agency has witnessed unrest in recent months

COLA’s latest announcement comes at a time when the Social Security Administration has been going through nearly a year of turmoil, including… 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 back door to the privatization of 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 in response to a question about whether raising the retirement age is a possibility to preserve the solvency of the old-age program.

Efforts to enhance benefits for seniors

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.

While a permanent solution to shoring up the benefits program has not yet passed into law, both the Trump and Biden administrations recently signed into law new benefits for retirees, which are expected to boost their finances.

Trump administration, as part of Republican tax and spending billprovided tax relief to many seniors through a temporary tax credit for seniors ages 65 and older, which applies to all income — not just Social Security. However, those who won’t be able to claim the deduction include low-income seniors who don’t already pay Social Security taxes, those who choose to claim their benefits before they turn 65 and those above a certain income threshold.

In addition to former President Joe Biden in 2024 He abolished two federal policies – The Windfall Elimination and State Pension Offset Provision — which previously limited Social Security payments to about 2.8 million people, largely including former government employees.

These measures hastened the bankruptcy of the old-age benefits programme.

“There have been long-standing questions about whether benefits are adequate for low-income seniors, which should inspire urgency among policymakers to work toward broader reforms rather than ignoring Social Security’s long-term solvency,” said Sprick, of the Bipartisan Policy Center.