What's Happening?
The Social Security Administration (SSA) has announced a 2.8% cost-of-living adjustment (COLA) for 2026, which will increase benefits by about $56 per month for 75 million recipients. This adjustment comes
after inflation data showed a slight acceleration in price increases. The SSA will also raise the maximum earnings subject to Social Security tax from $176,100 to $184,500. Notifications about the new benefit amounts will be sent to recipients starting in December.
Why It's Important?
The COLA is crucial for millions of Americans who rely on Social Security as a primary income source. While the increase aims to address inflation, many beneficiaries feel it falls short of covering their actual expenses, particularly in healthcare. The adjustment is based on inflation metrics from the third quarter, which may not fully capture the financial challenges faced by seniors. The increase in the taxable maximum also affects higher earners, contributing more to the system.
What's Next?
Recipients will receive notifications of their new benefit amounts by mail in December. The anticipated rise in Medicare Part B premiums could offset the COLA benefits, prompting further debate on the adequacy of these adjustments. Advocacy groups may continue to push for a COLA formula that better reflects the expenses of older Americans.
