Each year, all benefits issued by the Social Security Administration (SSA) receive a percentage increase relative to year over year inflation hikes. This is known as the Cost of Living Adjustment (COLA) and its purpose is to ensure all benefit checks retain its buying power as costs continue to rise. On October 24th, the SSA announced a 2.8% COLA increase for all benefits in 2026. There are tens of millions of beneficiaries in the Social Security program, and a significant number of these individuals rely primarily on their monthly benefits to make ends meet. As such, the importance of the COLA increase being implemented year after year cannot be overstated enough.
The 2026 COLA increase of 2.8% will add around $56 to the average retiree benefit. While the 2026 increase is somewhat average overall, it is still historic as it marks the fifth consecutive year where the COLA was at least 2.5% during this century. The COLA is a percentage increase, meaning that the specific dollar figure increase will differ from beneficiary to beneficiary. Furthermore, since Social Security benefits are determined in relation to the claimant’s lifetime earnings, some states will have higher COLA increases than others due to higher median wages. Here is what you need to know.
Breaking down the annual COLA increase
The COLA is determined by measuring the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the present year with the same data for the same period in the previous year. If there is an increase, this percentage figure becomes the next COLA increase, and if there is an decrease, the COLA will merely default to 0% — meaning that your benefits will always be increased but never be reduced in the context of inflation.
When the 2026 COLA boost of 2.8% comes into effect with the January round of benefits, retiree benefits will receive a $56 increase on average, bringing the average retiree benefit up to around $2,071. Disability benefits will, on average, receive a $44 increase, bringing the average disability benefit up from $1,586 to $1,630 in 2026.
According to an analysis from the Center on Budget and Policy Priorities, “Social Security pulled 22 million people above the federal poverty line in 2023, 16.3 million of whom were adults aged 65 and over.” Additionally, 24 annual surveys conducted by Gallup from 2002 to 2025 have revealed that, “80% to 90% of polled retirees need their Social Security income, in some capacity, to make ends meet.”
Five states that will receive the highest increase
Social Security benefits are determined largely in relation to the claimant’s lifetime earnings. The SSA takes 35 of your highest earning years into account when calculating your benefits. Factors such as retirement age and additional income also play an important role in the final calculation. Once a year, the SSA releases an Annual Statistical Supplement, which outlines in great detail precisely how benefits are being issued. Included amongst the numerous categories in the Annual Statistical Supplement is a geographical breakdown of average and median benefits for retiree, disability, and survivor benefits.
With the COLA increases of both 2025 and 2026, Connecticut, New Jersey, New Hampshire, Delaware, and Maryland are the top five states with the highest nominal dollar benefit increase in 2026. The dollar increases for these five states are outlined as follows:
- Connecticut: Average monthly retiree benefit expected to rise by $60.66 to $2,227.05.
- New Jersey: Average monthly retiree benefit expected to rise by $60.57 to $2,223.74.
- New Hampshire: Average monthly retiree benefit expected to rise by $60.11 to $2,206.90.
- Delaware: Average monthly retiree benefit expected to rise by $59.97 to $2,201.81.
- Maryland: Average monthly retiree benefit expected to rise by $58.96 to $2,164.77.
The reason for these states having a higher increase goes back to the formula used to calculate benefits. The logic is simple: if benefits are determined in relation to lifetime earnings, then states with higher median incomes will have higher average benefits. According to U.S. Census Bureau data for 2024, “in terms of median household income by state, New Hampshire ($111,800), Maryland ($109,700), New Jersey ($103,500) and Connecticut ($99,240), respectively, rank Nos. 2, 3, 6 and 8, excluding the District of Columbia.”