Social Security benefits will increase by 2.8% starting in January 2026, providing an average boost of $56 per month for approximately 75 million recipients, according to the Social Security Administration (SSA). This cost-of-living adjustment (COLA) is slightly higher than the 2.5% increase seen in 2025. The average COLA over the past decade has been 3.1%.

The announcement follows inflation data from September, which indicated a rise in prices, marking the highest inflation rate since January. This data was crucial for the SSA to finalize the COLA for 2026.

"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 and continue to provide a foundation of security," said SSA Commissioner Frank J. Bisignano in a statement.

In addition to the benefit increase, the SSA will raise the maximum earnings subject to Social Security tax from $176,100 to $184,500 in 2026. Notifications regarding the new benefit amounts will be sent to recipients by mail starting in early December.

The COLA increase will also affect nearly 7.5 million individuals receiving Supplemental Security Income, with their increased payments beginning on December 31.

The 2026 adjustment comes after a series of increases in previous years, including a 3.2% rise in 2024 and a significant 8.7% increase in 2023, which was driven by record-high inflation. The smaller increase for 2026 reflects a trend of moderating inflation.

Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center, noted that while cost-of-living increases are beneficial, they do not address all financial challenges faced by households.

The SSA has faced challenges in recent years, including workforce reductions and discussions about the program's future. In July, Treasury Secretary Scott Bessent reaffirmed the administration's commitment to protecting Social Security, despite earlier comments that raised concerns about potential privatization.

In September, Commissioner Bisignano clarified that raising the retirement age is not currently under consideration. However, the agency is under pressure as the Social Security trust funds are projected to be unable to pay full benefits starting in 2034, according to the June 2025 trustees' report.

The last major reform of Social Security occurred about 40 years ago, when the eligibility age was raised from 65 to 67. The upcoming adjustments aim to ensure that benefits remain aligned with current economic conditions while addressing the program's long-term sustainability.