Every October, I wait for the same announcement you do the Cost of Living Adjustment, or COLA. This number determines how much your Social Security checks will increase the following year. For 2026, the COLA has been set at 2.8%, based on the government’s CPI-W inflation formula. That means monthly checks are rising, but the amount depends on the type of benefit you receive.

To give you some real numbers, the average retiree benefit will increase from about $1,976 to around $2,031 per month. Survivor benefits for widows and widowers will rise from $1,837 to roughly $1,888. Disability benefits will increase by about $44 per month. A few percentage points may not sound like much, but for millions of Americans, that increase helps keep up with rising costs.

To understand where we are now, it helps to know where Social Security started. The program began in 1935, and taxes were first collected in 1937. Back then, workers and employers each paid just 1%, and only the first $3,000 of income was taxed. That means the maximum annual contribution was $30. Compare that to today: the tax rate is 6.2% on income up to $176,100. The scale of the system has changed dramatically.

One of my favorite Social Security facts is about Ida Fuller, the first person ever to receive a monthly Social Security check. She got her first payment in January 1940 $22.54. She only paid into the system for three years but ended up receiving nearly $23,000 over her lifetime. The earliest beneficiaries absolutely got the best deal.

COLA adjustments didn’t always work the way they do now. Before 1975, increases were completely political Congress raised benefits whenever they decided it was time. Since then, COLA has been tied to inflation through the CPI-W, comparing the third quarter of one year to the third quarter of the next. It’s a structured formula now, not a political choice.

The last few years have seen some big swings. We had very small increases in 2021 before inflation hit hard, giving us a huge 8.7% COLA in 2023. The last five years averaged about 4.32%. The new 2.8% increase for 2026 reflects a cooling economy but still higher costs for retirees across the board.

Understanding how Social Security calculates your benefit your Primary Insurance Amount, or PIA is essential for planning. Your PIA is based on your top 35 years of earnings, adjusted for inflation. Those numbers are totaled, divided by 420 months, and then run through bend points to determine your monthly benefit. After that, COLA increases continue every year until you claim benefits, regardless of your age.

Social Security and Medicare are also intertwined, something I see every day when helping people plan for retirement. Medicare decisions often affect Social Security income and vice versa. That’s why workshops and educational resources are so valuable and why I always encourage people to understand both before claiming benefits.

At the end of the day, Social Security remains one of the most important retirement tools we have. The 2026 COLA provides a modest but meaningful boost, and understanding the system’s history and calculations helps you make smarter decisions about when to file and how to plan.

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