COLA is often seen as an income boost for those receiving Social Security, but it’s important to understand how it can impact your benefits —even before you retire.
Every October, the Social Security Administration announces the cost-of-living adjustment (COLA) for the upcoming year. While many are aware of COLA, they may not fully understand its impact on their benefits and retirement planning.
First, What’s COLA?
COLA is an increase made to Social Security benefits to counteract the effects of inflation and rising prices in the economy. That means COLA can help you buy more of the things you want in retirement and maintain your standard of living.
COLAs are calculated by comparing average prices from the third quarter of this year to the same time last year. The percentage increase determines the COLA, which is then used to adjust Social Security benefits for inflation. For 2026, the COLA is set at 2.8%. Here’s how that could affect average benefits:
Estimated Average Monthly Social Security Benefits Payable in January 20261
| Beneficiary | Before 2.8% COLA |
After 2.8% COLA |
|---|---|---|
| Retired worker | $2,015 | $2,071 |
COLA is often thought of as an income bump by people on Social Security, but it’s helpful to know how COLA can affect your Social Security benefits even before retirement. Let’s look at how COLA can impact your benefits before you and after you file.
