Retirement and Social Security
Definition
The yearly increase in Social Security and SSI payments to keep up with inflation; it was 2.8% for 2026.
What it means
Each October, the Social Security Administration announces a cost-of-living adjustment based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year to the third quarter of the current year. The COLA starts with benefits payable in January; SSI recipients see it on December 31. For 2026, the COLA was 2.8%, which SSA says raised the average retired worker benefit from about $2,015 to $2,071 a month. If prices do not rise, there is no COLA, and benefits do not fall. Medicare Part B premiums deducted from benefits often rise at the same time, which can absorb part of the increase. Many federal and military pensions use the same COLA.
Example
A $1,800 monthly benefit with a 2.8% COLA rises by $50.40 to $1,850.40 a month, or about $605 more over a year, before any Medicare premium change.
Illustrative numbers only. Your situation will differ.