What to know about the latest Social Security cost-of-living adjustment

Average monthly Social Security benefits payments do not always stay the same. Instead, they inch up slowly over time based on what's known as a cost-of-living adjustment, or COLA.

These adjustments are supposed to reflect the increased cost of living that occurs due to "inflation and rising prices in the economy," said Investopedia. However, "many weren't happy with" the COLA for 2025, which marked "the smallest increase in years," said The Motley Fool. And it seems like 2026 is not shaping up to be much better.

What is COLA and how is it calculated?

Put simply, a cost-of-living adjustment (COLA) is a "change in benefits based on changes in the prices of goods and services," said NerdWallet. These adjustments affect Social Security retirement benefits as well as Social Security Disability Insurance (SSDI) payments and Supplemental Security Income (SSI) payments.

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The Social Security Administration (SSA) is responsible for calculating these adjustments and then applying them to people's benefit payments. Its COLA calculation hinges "on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)," which is a consumer price index that "tracks how the price of consumer goods and services changes over time," said NerdWallet.

To determine if a COLA is necessary and by how much, the SSA compares the CPI-W for the third quarter of the current year with the third quarter of the last year. Increases in the average CPI-W between those periods lead to an increase in benefits, while minimal or no change, or even a decrease, results in no adjustments being made.

How much did Social Security increase in 2025?

The Social Security Administration announced a COLA of 2.5% for 2025, "which translates to an average bump of $48 in monthly Social Security benefits and raises the average check for retired workers to $1,968," said CNBC Select.

The COLA was announced in October and "Social Security recipients should have been mailed an official notice about their 2025 benefits in December," said CNBC Select. The adjustment in benefits payments will be reflected in the first check received in 2025.

What is the COLA for 2026?

While COLA for 2026 will technically not be announced until October 2025, experts are still making projections. Initially, "after the BLS released the January inflation report, [nonpartisan senior advocacy group The Senior Citizens League] was estimating Social Security checks would rise by 2.3% next year," said The Motley Fool. "But with the pace of inflation slowing, the 2026 COLA forecast has slipped to 2.2%, which is below the average annual increase since 2010."

Ultimately, said Kiplinger, "Social Security beneficiaries are in something of a catch-22 situation; there is only a big COLA when inflation is high, but low inflation, which is good for fixed incomes, means a low COLA."