Social Security COLA Increase 2025 Brings Record Benefits

The social security cola increase 2025 brings welcome news for millions of Americans. Social Security benefits and Supplemental Security Income (SSI) payments will increase by 2.8 percent in 2026, affecting approximately 75 million Americans. This annual adjustment, although slightly lower than the 3.1 percent average we’ve seen over the past decade, still represents a meaningful boost for retirees across the country.

For many recipients, this means more money in their pockets. In fact, the average Social Security retirement benefit will increase by about $56 per month starting in January. However, it’s important to note that the 2026 Medicare Part B premium, which hasn’t been released yet, may offset some of these gains with an anticipated increase of $21.50. Additionally, this 2.8 percent adjustment follows a 2.5 percent COLA in 2025, demonstrating a continued commitment to helping beneficiaries keep pace with rising costs. Despite these increases, we should understand that costs in retirement have outpaced inflation, with retirees’ spending increasing at a 3.6% annual rate from 2000 to 2023, compared to the consumer price index increase of 2.6% during the same period.

SSA Announces 2.8% COLA Increase for 2025

The Social Security Administration has officially announced a 2.8% cost-of-living adjustment (COLA) for 2026, providing millions of Americans with increased benefits to help offset rising prices. This adjustment comes on the heels of the 2.5% increase recipients received in 2025.

What the 2025 Social Security COLA increase means

The forthcoming 2.8% adjustment will impact approximately 75 million Americans who rely on Social Security and Supplemental Security Income (SSI). This increase represents the government’s effort to maintain the purchasing power of benefits against inflation.

The adjustment is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2023 through the third quarter of 2024. Specifically, the COLA calculation is: (317.265 – 308.729) / 308.729 x 100 = 2.8 percent.

Furthermore, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $184,500 in 2026, up from $176,100 in 2025. For younger workers below full retirement age, the earnings limit will rise to $24,480.

When the new benefits take effect

Nearly 71 million Social Security beneficiaries will see their increased payments beginning in January 2026. Meanwhile, approximately 7.5 million SSI recipients will receive their increased payments slightly earlier, on December 31, 2025.

This timing difference occurs because the normal SSI payment date is the first of the month, but since January 1 is a holiday, SSI payments for January are always made at the end of the previous December.

How much the average monthly benefit will rise

On average, Social Security retirement benefits will increase by about $56 per month starting in January. This translates to meaningful increases across various beneficiary categories:

For retired workers, who comprise the largest group of recipients, monthly payments will see a noticeable boost. Currently, the average monthly Social Security check for retired workers is about $2,008.31 as of August 2025.

The SSA has modernized its notification process this year. Consequently, Social Security beneficiaries will receive a simplified, one-page COLA notice using plain language and providing exact dates and dollar amounts of their new benefit amount and any deductions.

SSA Explains How COLA is Calculated

Understanding how the 2.8% COLA increase is calculated requires looking at the mechanisms Social Security uses to adjust benefits for inflation. The Social Security Act precisely defines this process, which has been in place for nearly five decades.

What is the CPI-W and how it determines COLA

The COLA is tied directly to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is determined by the Bureau of Labor Statistics. This index measures price changes for urban households with workers in clerical or wage occupations, covering approximately 30% of the population—primarily low- and middle-income workers. Originally chosen in 1973 when automatic COLAs were enacted, the CPI-W was the only official price index available at that time.

The calculation follows a specific formula: SSA compares the average CPI-W for July, August, and September of the current year to the same period from the previous year. For 2026’s COLA, the average CPI-W for the third quarter of 2025 (317.265) exceeded the third quarter of 2024 (308.729) by 2.8%.

Why COLA varies year to year

Year-to-year COLA fluctuations primarily reflect changing inflation patterns. The formula remains constant, yet results vary based on economic conditions affecting consumer prices. If there’s no increase in CPI-W, there’s no COLA either—as happened in 2010, 2011, and 2016.

Essentially, the COLA serves as a financial safeguard. Enacted through legislation in 1972 with automatic adjustments beginning in 1975, it ensures Social Security and SSI benefits maintain their purchasing power against inflation.

How the 2025 COLA compares to past increases

The 2026 adjustment of 2.8% represents a modest increase from 2025’s 2.5%. Looking back further reveals significant historical variation:

The much higher COLAs in 2022 (5.9%) and 2023 (8.7%) reflected the substantial inflation during the COVID-19 pandemic—the largest increases in 40 years. Over the last decade, COLAs have averaged approximately 3.1%, making the current 2.8% adjustment slightly below average but still meaningful for beneficiaries.

Medicare Premiums May Offset COLA Gains

While the social security cola increase for 2025 provides welcome financial relief, Medicare premium hikes will reduce the actual benefit many seniors receive.

Projected Medicare Part B premium for 2025

The standard monthly premium for Medicare Part B will be $185.00 in 2025, marking a $10.30 increase from $174.70 in 2024. Moreover, the annual deductible will rise to $257.00, up $17.00 from the previous year. Higher-income beneficiaries face even steeper costs—individuals with income above $106,000 (or couples above $212,000) will pay the standard premium plus an income-related monthly adjustment amount, ranging from an additional $74.00 to $443.90 monthly.

How Medicare deductions affect net Social Security benefits

Medicare Part B premiums are typically deducted directly from Social Security benefits. As a result, many recipients will see their COLA gains partially absorbed by these higher healthcare costs. For instance, if you receive Social Security retirement benefits, your Part B premium is automatically subtracted from your monthly payment. This automatic deduction means your actual benefit increase will be less than the announced 2.8% COLA.

Why many recipients may see smaller net increases

Typically, an increase in COLA signals a rise in Medicare Part B premiums. Fortunately, the “hold harmless” provision protects beneficiaries by ensuring “no increase in Part B premiums can reduce a Social Security recipient’s monthly check below what it was in the previous year”. Nevertheless, those with limited incomes might qualify for Medicare savings programs to help cover these expenses.

Recipients Can Access COLA Notices Online or by Mail

Social Security beneficiaries have convenient options for receiving their 2025 social security cola increase notifications. The Social Security Administration provides both digital and physical access to these important notices.

How to use your my Social Security account

Beneficiaries can access COLA notices through their personal my Social Security accounts. This secure online portal allows recipients to view their notices in PDF format that can be saved or printed. Notably, the system offers a Message Center where beneficiaries can check their updated benefit amounts, complete with exact dollar figures and dates. Account holders can also opt to receive text or email alerts whenever new messages arrive. This free service puts beneficiaries in control of their information while providing immediate access to important documents.

Deadline to register for online access

To receive COLA notices online instead of by mail, beneficiaries must create their my Social Security account and opt out of paper notices by November 19, 2025. This advance registration allows recipients to view their 2026 benefit amounts up to three weeks earlier than those who receive notices by mail. First-time users will be prompted to choose their preferred communication method.

When mailed notices will be sent

For those who prefer traditional mail or miss the online registration deadline, Social Security begins sending COLA notices in early December 2025. The administration mails notices throughout the entire month of December. This year, many beneficiaries will receive a newly designed, simplified one-page notice that clearly displays exact dates and dollar amounts.