The annual cost-of-living adjustment (COLA) for Social Security is an important way the Social Security Administration (SSA) helps benefits keep pace with inflation.
Understanding how the COLA works, how it’s calculated, and what recent increases mean can help you plan your retirement or disability income more effectively.
What is the COLA for Social Security?
The COLA is an automatic benefit increase for recipients of Social Security retirement, disability, survivor, or Supplemental Security Income (SSI) benefits.
Its purpose is to ensure that the purchasing power of those benefits is not eroded by inflation.
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According to the SSA, this adjustment is applied each year when certain inflation criteria are met.
How is the COLA calculated?
The COLA is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The SSA compares the average CPI-W for the third quarter (July-September) of the current year with the same period from the previous year.
If there is an increase, that percentage becomes the COLA for the following year’s benefits.
The increase is rounded to the nearest one-tenth of 1 %. If the CPI-W does not rise, no COLA is granted.
What is the current COLA for 2025 and 2026?
For 2025, the COLA is 2.5 %, based on the CPI-W increase from the third quarter of 2023 to the third quarter of 2024.
For 2026, the SSA has announced a COLA of 2.8 %, which will take effect in January 2026 (and for SSI in December 2025).
Who gets the COLA and when does it take effect?
Nearly all Social Security beneficiaries receive the COLA if it is granted: retirees, those receiving disability benefits (SSDI), survivors, and SSI recipients.
You do not need to apply separately; the increase is automatic.
For most retirement and disability benefits, the new rate begins with the benefit payable in January following the calculation period.
For SSI, the new rates often begin with the December payment of the previous year.
How much will my benefit increase with the COLA?
The actual dollar increase depends on the size of your benefit. For example:
- Under a 2.5% COLA (2025), a benefit of $2,000 per month would increase by about $50.
- Under a 2.8% COLA (2026), a similar benefit would increase by about $56 per month.
The increase may seem modest, but it helps preserve your benefit’s value against inflation.
Why might the COLA feel too small?
Even though the COLA is tied to inflation, the CPI-W may not exactly reflect the price increases you personally experience, especially if you have high costs for healthcare, housing, or long-term care.
Also, if premiums for Medicare or other deductions rise, they can reduce the net benefit of the COLA increase.
What should you do to prepare for or respond to a COLA?
- Log in to your my Social Security account to check your upcoming benefit amount and verify your income record.
- Update your budget to reflect the increase — remember it’s automatic, but you may need to adjust your spending or savings strategy.
- Monitor other costs, such as healthcare premiums or housing, which may rise faster than your benefit.
- Maintain awareness of announcements from SSA about the COLA each year and how it impacts your benefits.