Many are waiting for the arrival of the new year 2026 to see how the payments received from the Social Security Administration (SSA) increase. This increase comes from the COLA (Cost of Living Adjustment) review, which is carried out each year. One of the main questions is: does everyone receive the same increase? The answer is yes, as the COLA percentage is applied equally to all Social Security beneficiaries, but with nuances. If you are a standard retiree, receive spousal or survivor benefits, or are collecting Social Security, you should see some increase in your income for the coming year, but it will not be the same for everyone.
While the purpose of COLA is to adjust for price increases due to inflation, providing a safeguard for beneficiaries, the percentage increase will result in higher income for those with larger benefit amounts. This is the case for those people who reach full retirement age and receive the maximum possible benefit from Social Security. Additionally, those who face the costs for Medicare and other related expenses will see a large part of that increase percentage go toward paying for these services.
COLA, Cost of Living Adjustment 2026
The Cost of Living Adjustment (COLA) is an essential mechanism implemented in the United States to ensure that Social Security payments are adjusted to economic realities. It serves as a guarantee for beneficiaries of the Social Security Administration, especially in the face of rising overall living costs due to inflation. It is calculated by comparing changes in the Consumer Price Index for Urban Wage Earners (CPI-W), specifically those of the third quarter of the current year with the same period of the previous year.
The difference between the two determines the percentage increase for the following year. After much speculation and rumors, it has finally been determined that more than 75 million people in the United States will experience a 2.8% increase in their income for 2026, given the new COLA percentage.
How will this increase be reflected in the lives of Americans?
According to the news portal Marca, “The Social Security Board estimates that retired workers will receive a 2.7% COLA in 2026. … the average monthly benefit would increase from about $2,007 in July 2025 to $2,061 in January 2026. This means that the average retired worker would receive an additional $54 per month, or $648 for the full year.” However, 2.8% of $1,500 is not the same as 2.8% of $3,000, right? Well, that is where the nuance lies. The COLA increase will be reflected according to the amount of income received. According to the official Social Security website, the following changes will occur:
- The maximum taxable amount for earnings derived from Social Security will increase to $184,500.
- Workers who are below full retirement age will see their earnings limit increase to $24,480 (with $1 deducted from benefits for every $2 earned above $24,480).
- People who reach full retirement age in 2026 will have their earnings limit increased by $65,169 (with $1 deducted from benefits for every $3 earned above $65,160 until the month the worker reaches full retirement age).
- There is no earnings limit for workers who reach full retirement age or are older during the entire year.
Medicare
Additionally, another key factor is the payment of Medicare and other related expenses, which have also experienced an increase. According to Marca, “The bad news is… the reality is that it does not provide more purchasing power as a traditional raise would. Instead, its purpose is to help protect retirees against the loss of purchasing power due to inflation. For any retiree on Medicare, the COLA is likely to be a big disappointment due to how little will be left after Medicare premiums are taken into account”.