Social Security Benefits to Increase by 2.8% in 2026

The Social Security Administration announced Friday that its benefit payments for 71 million recipients in 2026 will increase by 2.8%. The average monthly benefits for retired workers will rise by about $56, to $2,064 from $2,008, starting in January.

Nearly 7.5 million Supplemental Security Income beneficiaries will also see a 2.8% cost-of-living adjustment next year. In total, 75 million U.S. residents will receive either or both increased payments.

The maximum amount of earnings subject to the Social Security tax will also increase next year, to $184,500 from $176,100.

The SSA’s calculation is based on the average of the previous three months’ inflation, as measured by the U.S. Bureau of Labor Statistics’ Consumer Price Index. Next year’s COLA is slightly higher than the Senior Citizen League’s September forecast of a 2.7% increase. According to the Bureau of Labor Statistics, the annual COLA has averaged about 3.1% over the last decade, and the highest yearly adjustment to benefits in that time was 8.7%, effective in January 2023.

“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities,” Social Security Administration Commissioner Frank Bisignano said in a statement. “The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”

Economists said the September CPI increase was lower than expected, making it more likely that the Federal Reserve will further cut its Open Market Committee’s overnight lending rate in December.

“The pass-through of higher tariffs to consumers has continued to undershoot expectations, which in turn has opened the door for the Fed to lower rates to support a cooling labor market,” said Josh Jamner, senior investment strategy analyst at ClearBridge Investments, in a statement. “Even a glass-half-empty interpretation of today’s release is that inflationary trends held steady last month, while a glass-half-full framing is that inflationary trends improved.”

The announcement comes more than three weeks into the shutdown of the U.S. government and more than two weeks after Bisignano, confirmed to head the Social Security Administration in May, was appointed to also lead the IRS in a newly created CEO position, thereby overseeing operations in both government agencies.

Social Security has kept more than 45,000 workers employed and intends to continue “accurate and timely payment of benefits,” according to the bureau’s shutdown contingency plan.