How Social Security adjusts each year
Social Security changes annually through a process called the Cost of Living Adjustment (COLA). The Social Security Administration calculates COLA by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the previous year. The percentage increase becomes the adjustment applied to all benefit payments the following January.
For 2026, the COLA will be determined by comparing third-quarter 2025 inflation data to third-quarter 2024 data. The exact percentage will not be announced until October 2025, when the Social Security Administration releases the official figure. This means current benefit amounts and the 2026 adjustment are not yet final.
COLA affects not only monthly benefit payments but also the earnings limit for people who work while receiving benefits, the maximum earnings subject to the payroll tax, and the bend points used to calculate initial benefit amounts for new retirees.
Key Takeaways
- The 2026 COLA percentage will be announced in October 2025 and reflects inflation measured from mid-2024 to mid-2025.
- COLA adjustments change monthly benefit amounts, work earnings limits, and the maximum earnings subject to Social Security tax.
- People already receiving benefits will see the increase applied to their January 2026 payment.
- The adjustment affects all benefit types: retirement, survivor, and disability payments.
What the 2026 adjustment means for current beneficiaries
If you are already receiving Social Security retirement, survivor, or disability benefits, your monthly payment will increase by the 2026 COLA percentage starting with your January 2026 payment. You do not need to do anything to receive this increase—it happens automatically.
The size of your increase depends on your current benefit amount. Someone receiving $1,500 per month will see a larger dollar increase than someone receiving $1,000 per month, even though the percentage is the same for everyone. For example, if COLA is 2.5%, a $1,500 benefit becomes $1,537.50, while a $1,000 benefit becomes $1,025.
The Social Security Administration typically mails a notice in December showing the new benefit amount and the effective date of January 1, 2026. If you receive benefits by direct deposit, the new amount will appear in your bank account on the payment date for January.
Earnings limits and work rules in 2026
Social Security sets an annual earnings limit for people under full retirement age who continue working while receiving benefits. In 2025, that limit is $23,400. The 2026 limit will increase by the COLA percentage, though the exact new figure will not be announced until October 2025.
If you earn more than the annual limit in 2026, Social Security will withhold $1 in benefits for every $2 you earn above the limit. This withholding applies only to the year you exceed the limit; once you reach full retirement age, the earnings limit no longer applies and you can work without any reduction to benefits.
The earnings limit affects only wages and self-employment income. It does not count investment income, pensions, annuities, or other non-work income.
Maximum taxable earnings and payroll tax changes
Social Security is funded through a payroll tax of 12.4% (6.2% from the employee, 6.2% from the employer, or 15.3% for self-employed workers). The tax applies only to earnings up to an annual maximum, which increases each year with COLA.
In 2025, the maximum taxable earnings are $168,600. For 2026, this figure will rise by the COLA percentage. A higher maximum means higher-income workers will pay Social Security tax on a larger portion of their earnings, though the overall tax rate remains 12.4%.
This change affects both employees and employers. Self-employed workers pay the full 12.4% on net self-employment income up to the new maximum.
Bend points and initial benefit calculations for new retirees
Social Security calculates your initial benefit amount using bend points, which are dollar thresholds that determine how much of your average earnings are replaced by your benefit. The bend points adjust annually based on the national average wage index, which is separate from COLA but often moves in the same direction.
For someone turning 62 or reaching full retirement age in 2026, the bend points used to calculate their initial benefit will reflect 2024 wage data (the most recent complete year available). These bend points will be higher than 2025 bend points, meaning the calculation will be based on higher earnings thresholds.
The exact 2026 bend points will be published by the Social Security Administration in late 2025, typically in November. New retirees do not need to understand bend points in detail—the Social Security Administration applies them automatically when calculating your benefit.
When the 2026 adjustment is announced and takes effect
The Social Security Administration announces the 2026 COLA in October 2025. The announcement includes the percentage increase and explains how it affects different groups of beneficiaries.
The adjustment takes effect on January 1, 2026. Beneficiaries receive the new amount in their January payment, which typically arrives on the third day of the month (or the first business day after if the third falls on a weekend or holiday).
If you are not yet receiving benefits but plan to claim in 2026, the COLA does not directly affect your decision. Your benefit amount will be calculated using your actual earnings record and the bend points in effect when you claim, not the 2025 or 2026 COLA.
How inflation affects the size of future adjustments
COLA is tied directly to inflation. If inflation is high between mid-2024 and mid-2025, the 2026 COLA will be higher. If inflation is low, COLA will be lower. In years with deflation (falling prices), COLA can be zero or negative, though the law prevents benefit reductions—benefits straightforward stay flat.
The CPI-W measures price changes for a specific group of workers and may not reflect your personal spending. If your costs rise faster than the CPI-W, your benefit increase may not keep pace with your actual expenses. Conversely, if your costs rise slower than the CPI-W, the adjustment may exceed what you need.
COLA has ranged from 0% (in 2010 and 2011) to 8.7% (in 2023). The 2024 COLA was 3.2%, and the 2025 COLA was 3.2% as well. These recent adjustments reflect the elevated inflation of 2021 through 2024.
Frequently Asked Questions
When will I know the exact 2026 COLA percentage?
The Social Security Administration announces the 2026 COLA in October 2025. You can find the announcement on the official Social Security website or by calling 1-800-772-1213. Major news outlets also report the figure when it is released.
Do I have to do anything to get the 2026 increase?
No. If you are receiving benefits, the increase is applied automatically to your January 2026 payment. You do not need to contact Social Security or take any action.
How does the 2026 adjustment affect my Medicare premiums?
Social Security has a rule called the "hold harmless" provision that protects most beneficiaries from having their Medicare Part B premiums rise faster than their Social Security increase. However, higher-income beneficiaries and those new to Medicare may not receive this protection. The Social Security Administration will explain any Medicare premium changes in your December notice.
If I delay claiming until 2026, will I get a higher benefit?
Delaying past your full retirement age increases your benefit by 8% per year until age 70, regardless of COLA. The 2026 COLA does not change this delayed retirement credit. However, your initial benefit amount will be calculated using 2026 bend points, which will be higher than 2025 bend points, so your starting amount may be slightly higher than if you claimed in 2025.
Will the earnings limit increase affect my benefits if I work in 2026?
Only if you earn more than the new 2026 limit. The limit will increase by the COLA percentage, so the threshold will be higher than 2025. If you stay below the new limit, your benefits are not reduced. If you exceed it, Social Security withholds $1 for every $2 over the limit.