Halloween isn’t that scary, but the newly announced 2026 Social Security cost of living adjustment (COLA) sure is! In this week’s blog we will look at what the COLA is, how it is arrived at, why the 2026 number is scary, and what you might consider if you haven’t yet taken Social Security.
What is the Social Security COLA and why is it important?
The cost of living adjustment (COLA) is made each year to ensure that Social Security benefits keep up with inflation. It is designed to offset inflation and to maintain purchasing power, helping people pay rising costs associated with housing, food, and energy.
How is the increase calculated each year?
The Social Security Administration uses a specific formula, based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, to determine the annual COLA for Social Security benefits. The 2025 COLA was 2.5%.
Why is the 2026 Social Security COLA scary?
Late last week, the Social Security Administration released the 2026 COLA which will be 2.8%. Although this is slightly higher than the 2025 COLA, it is likely not enough to keep up with inflation. The 2026 COLA will amount to an extra $56 per month for 75 million recipients, which is better than nothing, but pales in comparison to rapidly rising costs of living.
I haven’t yet taken Social Security, despite being over 62. What should I do?
There are benefits to waiting until full retirement age (age 67 for anyone born in 1960 or later) instead of taking early retirement benefits, although everyone’s situation is different. Each year that you wait increases the amount you will receive per month in a more significant way than the COLA will.
What happens next?
If you are receiving Social Security benefits you will be notified about your increased 2026 amount starting in early December.
If we can be of assistance to you, please reach out. We are only a phone call or e-mail away. Happy Halloween!
