Each year, Social Security benefits undergo a raise relative to year over year inflation, and this is called the Cost of Living Adjustment (COLA). The Social Security Administration (SSA) announces the COLA for each upcoming year in October as soon as the data required for the calculation becomes available. This year’s COLA announcement brought the confirmation of a 2.8% increase to all benefits as of January 2026.
The 2026 COLA of 2.8% is ever so slightly higher than the COLA of 2025 which came in at 2.5%, however, experts fear that the COLA may still fall short in truly addressing the rising costs faced by seniors across the country. Here is what you need to know.
SSA announces 2.8% COLA increase
On October 24th, the SSA officially announced a COLA of 2.8% for all benefits in 2026. This would bring an additional $56 to the average benefit check as of January. According to the SSA, the COLA increase has averaged around 3.1%, while the 2025 COLA brought retirees a 2.5% increase. As such, the COLAs for both 2025 and 2026 read as below average when considering the COLAs of the past decade.
Another less desirable increase that will likely go into effect alongside the COLA increase in 2026 is the Medicare Part B premium. The actual percentage by with the premium will increase has not yet been confirmed, however, projections in the annual Medicare report say that it could be around 11.6%. This would bring the premium cost up from $185 to around $206, which will then eat away at a significant portion of the COLA increase because Part B premiums are automatically deducted from Social Security benefits.
According to The Senior Citizens League executive director, Shannon Benton, “The 2026 COLA is going to hurt for seniors. Year after year, they warn that Social Security’s meager increases won’t be enough, and the Census Bureau estimates that about 10 percent of retirement-age Americans live in poverty. However, our research suggests that the number may be higher. It’s about time our elected representatives show up for seniors, or else seniors won’t show up for them at the voting booth.”
Advocates are pushing for change to COLA formula
The COLA is determined using the Consumer Price Index for Urban Wage Earners (CPI-W). This index has over 200 spending categories, each of which holds a differing weight in the final calculation. Since the CPI-W measures the cost of basket of goods and services relative to individuals currently in the workforce who are also presumably much younger, experts feel that the CPI-W causes the COLA formula loses accuracy.
A recent study from TSCL has revealed that, “the average senior who retired in 1999 has lost nearly $5,000 in Social Security payments as a result of the government using the wrong price index to calculate Cost-of-Living Adjustments (COLAs).”
TSCl further noted that the loses faced by seniors as a result of the incorrect formula is only compounding with each passing year. TSCL’s analysis predicts that, “if current long-term inflation patterns continue, the average person who retired in 2014 will lose about $8,000 of benefits across a 25-year retirement from using COLAs calculated with the CPI-W instead of the CPI-E. For someone who retired in 2024, we project that number to rise to just over $12,000.”
As such, TSCL has been advocating for the SSA to switch from the CPI-W to the CPI-E (Consumer Price Index for the Elderly) in its COLA formula. This would allow for costs such as housing and medical care to be more accurately accounted for.
“One straightforward option for reforming Social Security COLAs would be calculating them with the Consumer Price Index for the Elderly (CPI-E) instead of the Consumer Price Index for Urban Wage Earners (CPI-W), which is the government’s current measure for calculating COLAs. The CPI-E is specifically designed to represent older Americans’ spending habits. As a recent TSCL analysis shows, it tends to come in higher than the CPI-W about 69 percent of the time, resulting in thousands of dollars in lost benefits for seniors,” Benton stated.
It is also worth noting that the CPI-E is still an experimental index, which means that it is not currently in use by government agencies.