What to Know About The 2026 Social Security Increase

Let’s start with some good news about Social Security that I think too many people don’t appreciate: Your payout is adjusted for inflation. That is, your earned benefit increases by a certain percentage each year, based on the rate of inflation the Social Security Administration tracks.

To be clear, my friends, you don’t get an inflation adjustment with your IRA and 401(k) accounts. And most pensions don’t adjust for inflation either.

That’s one reason why Social Security is such a valuable piece of your retirement planning.

Now let’s talk about the less-great news. This annual increase, called the cost-of-living-adjustment (COLA), will be 2.8% in 2026.  I know that seems low given that for many households, utility costs have risen more than 5% the past year, food is up more than 3% on average, and rents rose more than 3% on average as well.

Why the disconnect? Well, a big reason is the time frame used by Social Security: Benefits are calculated from the third quarter (end of Sept) of one year to the third quarter of the next year. And 2.8% is where things fall in that time frame, even though the current annual general rate of inflation is 3%.

COLAs matter a lot starting at age 62

Even if you aren’t yet collecting Social Security, you sure better be paying attention. Once you turn age 62, your annual benefit is increased by the annual COLA even if you aren’t yet collecting your benefit.

You know my advice is to not start collecting at age 62 so you can qualify for a much higher payout later.

The biggest payout is if you wait until age 70, but waiting until your full retirement age—age 67 for anyone born in 1960 or later—is a great goal too if you are in average health. For someone with a full retirement age of 67, starting at that age will mean a benefit that is 30% higher than if they start at age 62.

And every year from 62 to 67 while they wait, Social Security still adjusts their future benefit by the annual COLA. So someone at least 62 who isn’t yet collecting Social Security will get both the higher benefit from delaying, as well as the annual inflation adjustment added to their future benefit.