Social Security Plans 2.5% COLA Boost for 72.5M Beneficiaries in 2026

The Social Security Administration is preparing to announce the 2026 Cost-of-Living Adjustment (COLA), which affects over 70 million beneficiaries and is projected to be between 2.6% and 2.7%, slightly higher than the 2.5% increase implemented in 2025. This annual adjustment, based on inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter, aims to protect beneficiaries' purchasing power amid rising prices. While the COLA provides a financial boost, rising Medicare premiums and taxes may offset some of these gains, meaning the net benefit increase might feel less significant to many retirees. The COLA also impacts various Social Security thresholds, including earnings limits and taxable maximums, which are adjusted accordingly each year. Beneficiaries eagerly await the official COLA announcement, as it directly influences their monthly income and ability to manage essential expenses like healthcare, housing, and groceries. Despite the benefits, the link between COLA and inflation creates a challenging dynamic where increased benefits reflect higher inflation, which can erode overall financial comfort for retirees.