The Social Security Administration on Friday announced a 2.8% cost-of-living adjustment for 2026, raising monthly payments for nearly 71 million beneficiaries beginning early next year.
That bump will see the average Social Security retirement benefit rise by about $56 per month, according to the SSA.
The increase marks a slight bump from last year’s 2.5% adjustment, reflecting a modest rise in inflation. The U.S. Bureau of Labor Statistics reported Friday that the Consumer Price Index — a key measure of U.S. inflation — climbed 3% over the past year through September.
The BLS was expected to release September inflation data on Oct. 15, which the Social Security Administration uses to calculate the 2026 cost-of-living adjustment. A delay in that release caused by the ongoing government shutdown pushed the SSA’s announcement back by nine days.
The official COLA figure was roughly in line with an earlier forecast from nonpartisan advocacy group The Senior Citizens League, which estimated a 2.7% increase earlier this year.
Shannon Benton, The Senior Citizens League executive director, said in a statement that a 2.8% increase 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% of retirement-age Americans live in poverty,” Benton said. “However, our research suggests that the number may be higher.”
Advocates want a better COLA calculation
Advisors and advocates argue that using a different inflation gauge — such as the CPI-E — could make COLA adjustments better reflect seniors’ real costs.
Currently, the SSA determines the annual COLA by calculating the percent change in the Consumer Price Index for urban wage earners and clerical workers (CPI-W) from the third quarter with the same period a year earlier.
The CPI-E, which tracks spending patterns of older Americans, rose 3% year over year in 2025. If COLA were based on CPI-E instead of CPI-W, the increase for this year’s benefits would have been about 0.5 percentage points higher.
Some major expenses, like Medicare Part B premiums and homeowner’s insurance, are far outpacing the annual cost-of-living adjustment.
The Medicare trustees report projected monthly Part B premiums to rise 11.6%, to $206.50 in 2026. And the insurance marketplace Insurify estimates that homeowner’s insurance rates will rise 8% this year compared with 2024, with tariffs potentially adding another 3% as premiums absorb higher costs for rebuilding materials.
Along with a switch to CPI-E, The Senior Citizens League has also proposed instituting a minimum annual COLA of 3%. Advisors like John Bell, founder of Free State Financial Planning in Highland, Maryland, say that such changes would help beneficiaries, but would still likely fail to keep up with true inflation.
“To keep it flat, moving forward at 3% and adjusting up depending on what’s happening in the real world is not a bad approach. Because I don’t think we’re ever going to catch up to what the real inflation is by having a CPI that hovers around 3% forever,” Bell said. “The insidious nature of inflation is that it compounds upon itself, and … if inflation, real inflation, is going up, let’s just say 5% a year, and the COLA is only going up 3% a year, you’re always losing ground. You never catch up. And so I have just a fundamental problem with the whole calculation.”
Advising around a lackluster COLA
Advisors say it’s difficult to soften the blow of a disappointing COLA figure for their senior clients, but there are a few key areas they focus on.
While not a quick-fix solution for inflation, advisors say it’s important that older clients build up a position in anti-inflationary assets like gold. Simultaneously, advisors should be working to ensure clients have a buffer of their own for when Social Security falls short of covering inflated expenses.
“I look at it as a lifetime planning exercise. It’s not ‘Do a plan one time and never look at it again.’ Because things change,” Bell said. “People do go through different spending patterns in life. Early retirement, people are spending as much, or if not more, because they’re doing more things. Then it dips, and then it increases near the end of their life, when healthcare comes into play. So I don’t look at it as a flat line.”
“People change, and people have different goals, and they approach circumstances differently, and it’s my job to help them figure that out or present alternatives for how they want to spend their money in retirement,” he added.
