Each year since 1975, all benefits issued by the Social Security Administration (SSA) undergo a percentage increase equivalent to the percentage rise of inflation from one year to the next. This increase is called the Cost of Living Adjustment (COLA) and in 2025, all beneficiaries in the program received a 2.5% increase. On October 24th, the SSA officially announced the 2026 COLA with a 2.8% raise set to go into effect with the January round of benefits, and this includes the Supplemental Security Income (SSI).
The COLA is not the only change that takes place within the Social Security program from each year to the next. Other important factors such as the wage cap or the retirement earnings limit also tends to increase on an annual basis and is usually announced alongside the COLA increase. In 2026, another increase that directly impacts retirees aged 65 and older is also set to go into effect and that is the cost of the Medicare Part B premium.
For households whose budgets rely predominantly on their monthly benefit checks, knowing precisely how much they will receive is of utmost importance. In the SSA’s official COLA announcement, the agency states that personalized notices outlining the beneficiary’s COLA increase will be mailed out by early December. Here is everything you need to know.
What does a 2.8% COLA increase mean for retirees?
On average, a 2.8% COLA increase will bring an additional $56 per month to seniors since the average retiree benefit current amounts to around $2,008. The $56 increase is, of course, only an average and the actual dollar amount received by each respective beneficiary will vary. Social Security benefits are determined primarily in relation to the claimant’s lifetime earnings and as such, higher income earners will have higher benefit amounts, while lower income earners will have lower benefit amounts — and the same logic will apply to COLA increases.
The SSA has stated that personalized notices will be mailed out to beneficiaries starting in early December, with the expectation of all beneficiaries receiving their notice by the end of December. Alternatively, beneficiaries will be able to view their COLA notice online through their my Social Security accounts starting in late November. Social Security recipients who are also enrolled in Medicare will be able to view their 2026 premiums in the online Message Center as well. It is also worth noting that regardless of whether or not you receive the notice, the increased benefit will still be issued to you starting in January 2026.
Medicare premium hike
Medicare Part B enrollees should also be aware of the 9.7% premium hike that has now been confirmed for 2026. This 9.7% increase will bring the cost of the Part B premium, which is automatically deducted from Social Security benefits, up from $185 to $202.90. For higher income earners, this may not have as significant an effect, however, lower income earners will see their COLA increase eaten up by the premium hike before their benefit even reaches them.
There is a measure called the hold harmless provision in place aimed at preventing this kind of loss for seniors, however, experts say that it may still fall short. “Medicare’s “hold harmless” provision limits the rise in Medicare Part B premiums deducted from Social Security benefits to no more than a given year’s COLA, but that means many seniors get their COLAs merely reduced instead of overtaken altogether,” according to TSCL.
New wage cap and retirement earnings limit
The SSA limits how much of your income it considers when you are making your Social Security payroll tax contributions and this limit is known as the wage cap. In 2025, the wage cap is $176,100, however, this will be increased to $184,500 in 2026. This increase will mainly impact higher income earners as their contributions will now be increased.
If you are working while claiming benefits, you will be subject to a retirement earnings test if you have not yet reached full retirement age (FRA). If your income exceeds certain thresholds, a portion of your benefits will be withheld until you reach FRA. The income limits before your benefits are withheld will be increasing as follows in 2026:
- If you will not reach FRA for the full year, the earnings limit is $24,480 and for every $2 you earn above this limit, $1 of your benefit will be withheld.
- If you are going to reach FRA within the year, the earnings limit is $65,160 and for every $3 you earn above this limit, $1 of your benefit will be withheld.