Major Change Affecting Social Security Payments In 2026 Revealed

Social Security recipients get a 2.8 percent cost-of-living adjustment in 2026, according to an announcement Friday by agency officials.

The COLA will average $56 a month for the nation’s 70 million retirees and disabled beneficiaries.

The COLA is financed by payroll taxes collected from workers and their employers. An annual salary cap, slated to increase to $184,500 in 2026, from $176,100 in 2025, limits what higher-income earners contribute.

Social Security recipients received a 2.5 percent cost-of-living boost in 2025, and a 3.2 percent increase in their benefits in 2024, after a historically large 8.7 percent benefit increase in 2023, brought on by record 40-year-high inflation.

But Is It Enough?

Some seniors say the cost-of-living adjustment won't help much in their ability to pay for their daily expenses. Linda Deas, an 80-year-old Florence, South Carolina, resident told The Associated Press “it does not match the affordability crisis we are having right now.”

Deas, a retired information systems network operations specialist, moved to South Carolina from New York in 2022 to be closer to family. She says her monthly rent has increased by $400 in the past two years.

She listed other items that have become more expensive for her in the past two years, including auto insurance and food. “If you have been into the supermarkets lately, you will notice how prices are going up, not down,” she said.

Deas is not alone in feeling that costs are getting out of control. Polling from the AARP shows that older Americans are increasingly struggling to keep up in today’s economy.

The poll states that only 22 percent of Americans over age 50 agree that a COLA of right around 3 percent for Social Security recipients is enough to keep up with rising prices, while 77 percent disagree. That sentiment is consistent across political party affiliations, according to the AARP.

In Deas’ case, the MIT Living Wage Calculator estimates that an adult living alone in Florence, South Carolina, would spend per year $10,184 for housing, $3,053 for medical expenses and $3,839 for food.

AARP CEO Myechia Minter-Jordan said the COLA is “a lifeline of independence and dignity, for tens of millions of older Americans,” but even with the annual inflation-gauged boost in income, “older adults still face challenges covering basic expenses.”

Social Security Administration Commissioner Frank Bisignano said in a statement Friday that 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.”

Emerson Sprick, the Bipartisan Policy Center’s director of retirement and labor policy, said in a statement that cost-of-living increases “can’t solve all the financial challenges households face or all the shortcomings of the program.”

Agency In Turmoil For Months

The latest COLA announcement comes as the Social Security Administration has been navigating almost a year of turmoil, including the termination of thousands of workers as part of the Trump administration’s efforts to shrink the size of the federal workforce. Trump administration officials have also made statements they later walked back that raised concerns about the future of the program.

Treasury Secretary Scott Bessent said in July that the Republican administration was committed to protecting Social Security hours after he said in an interview that a new children’s savings program President Donald Trump signed into law “is a back door for privatizing Social Security.”

And in September, Bisignano had to walk back comments that the agency is considering raising the retirement age to shore up Social Security.

“Raising the retirement age is not under consideration at this time by the Administration,” Bisignano said at the time in an e-mailed statement to The Associated Press.

“I think everything’s being considered, will be considered,” Bisignano said in the statement when asked whether raising the retirement age was a possibility to maintain the old age program’s solvency.

Efforts To Boost Benefits

In addition, the Social Security Administration faces a looming bankruptcy date if it is not addressed by Congress. The June 2025 Social Security and Medicare trustees’ report states that Social Security’s trust funds, which cover old age and disability recipients, will be unable to pay full benefits beginning in 2034. Then, Social Security would only be able to pay 81 percent of benefits.

Social Security benefits were last reformed roughly 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67.

While a permanent solution for shoring up the benefits program has not been passed into law, both the Trump and Biden administrations have recently signed into law new benefits for retirees, which are expected to boost their finances.

The Trump administration, as part of Republicans’ tax and spending bill, gave tax relief to many seniors through a temporary tax deduction for seniors aged 65 and over, which applies to all income — not just Social Security. However, those who won’t be able to claim the deduction include the lowest-income seniors who already don’t pay taxes on Social Security, those who choose to claim their benefits before they reach age 65 and those above a defined income threshold.

Additionally, former President Joe Biden in 2024 repealed two federal policies — the Windfall Elimination Provision and the Government Pension Offset — that previously limited Social Security payouts for roughly 2.8 million people, including largely former public workers.

These measures have accelerated the insolvency of the old-age benefits program.

Sprick at the Bipartisan Policy Center said “there have been longstanding questions about whether benefits are adequate for low-income seniors, which should inspire urgency among policymakers to work toward broader reforms instead of ignoring Social Security’s long-term solvency."

Annual Inflation Up 3%

The COLA was to have been announced earlier this month, but was delayed due to the government shutdown. The September Consumer Price Index report is used to set the annual cost-of-living raise, and that was delayed because some Labor Department employees were furloughed.

The Trump administration called some of those workers back to produce the September inflation report. Consumer prices increased 3 percent last month from a year earlier, up from 2.9 percent in August, as the costs of some imported goods rose while rental prices cooled.

The increase is smaller than many economists had forecast, and will likely encourage the Federal Reserve to cut its key interest rate when it meets next week.

Excluding the volatile food and energy categories, core prices also rose 3 percent, a decline from 3.1 percent in the previous month. Both figures are above the Federal Reserve’s 2 percent target.

The Associated Press contributed reporting.