The Social Security Administration announced Friday that benefit payments will increase 2.8% next year to account for the higher cost of living.
The 2026 cost-of-living adjustment, knowns as the COLA, represents an increase over last year’s 2.5% figure, but it is lower than the historical average of about 3.7%.
Individual retirement benefits will climb an average of about $56 per month, the agency said in a statement.
The COLA is typically calculated using benchmark inflation data from July, August, and September.
While pandemic-era inflation has ebbed since hitting a high of nearly 10% in 2022, households across the U.S. continue to report feeling price pressures.
Many senior citizens’ advocates say that that demographic has been hit particularly hard — and that the way the annual Social Security adjustment is made has become part of the problem.
Since it was first instituted in 1975, the annual adjustment has been calculated using a somewhat obscure inflation index that the advocates say gives inadequate weight to items that seniors tend to spend a greater share of their earnings on, like medical care, prescription drugs, rent, and home energy costs.
“The index doesn’t necessarily reflect the spending habits of older adults,” said Jessica Johnston, senior director of the Center for Economic Well-Being at the National Council on Aging (NCOA). By her estimates, she said, a 4% adjustment would more accurately reflect these costs.
More than one-in-five Americans currently receive some form of social security assistance, including approximately 58 million Americans aged 65 and over. Seniors have historically been more likely to report worsening consumer sentiment, according to the University of Michigan’s closely watched monthly survey. The gap in sentiment has narrowed in recent years — but other data suggest that hard times are getting harder for the most vulnerable seniors.
Between 2018 and 2023, older Americans were the only demographic age group that saw an increase in its poverty rates — though their overall rate remains the lowest.
An NCOA report published earlier this month found that mortality rates among older adults in the bottom 60% of wealth were nearly double those of older adults in the top 20%. And individuals in the bottom-20% of wealth died nine years earlier on average than those in the top 20%.
The NCOA also estimates that 45% of older-adult households — more than 19 million — do not have the income needed to cover basic living costs based on cost-of-living data from its proprietary Elder Index. And a full 80%, or about 34 million senior households, would be unable to weather a major shock such as widowhood, serious illness, or the need for long-term care.
