Social Security's COLA Is 2.8% -- but Your Benefits May Go Up by a Lot Less

"For this reason, it's a good thing that Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. The purpose of Social Security COLAs is to help ensure that benefits are able to keep up with inflation. Imagine you begin collecting Social Security at age 62, which is the earliest age to file, and you live until age 92. The cost of everyday items is extremely like to rise over 30 years. In fact, it's very likely to rise over even three or four years."

"Without Social Security COLAs, beneficiaries would be almost guaranteed to lose out on buying power over time. For this reason, lawmakers decided decades ago that Social Security COLAs would be automatic and pegged to an index called the CPI-W, or Consumer Price Index for Urban Wage Earners and Clerical Workers. Of course, this doesn't mean that Social Security benefits actually get a COLA every year. If there's no change in the CPI-W from one year to another year, or if there's a decrease, Social Security benefits do not go up (thankfully, they also don't go down)."

Millions of older Americans rely on Social Security for retirement income, often as a primary source. Annual COLAs are designed to help benefits keep pace with inflation by tying adjustments to the CPI-W. COLAs are automatic and occur only when the CPI-W rises; benefits do not decrease when the index falls. Changes from Q3 2024 to Q3 2025 make benefits eligible for a 2.8% COLA in 2026, slightly larger than the 2.5% COLA in 2025. Medicare enrollees collecting Social Security may see part of that increase offset by higher Medicare premiums, lowering the net gain.

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