Social Security COLA: How the Annual Raise Works

1Why this matters

For most retirees, Social Security is the one income source that rises with prices, and the COLA is how it does. Over a long retirement those raises add up: a benefit that grows 2 to 3 percent a year is worth a third more after a decade. Understanding how the figure is set explains why it moves the way it does, why your deposit may not rise by as much as the announcement, and how it can affect other help you receive. For how the benefit itself is calculated, see our guide to how much Social Security you will get.

2How is the COLA calculated?

The formula is fixed in law. Social Security takes the average CPI-W for July, August and September and compares it with the average for the same three months in the last year a COLA was paid. The percentage increase, rounded to the nearest tenth of a percent, is the COLA for benefits payable from the following December, which are paid in January.

If prices did not rise, there is no COLA, and benefits do not go down. Recent adjustments show how much the figure can vary with inflation:

• 2023: 8.7 percent.
• 2024: 3.2 percent.
• 2025: 2.5 percent.
• 2026: 2.8 percent.

The measuring period ends in September, so the announcement comes in October, soon after the Bureau of Labor Statistics publishes September's prices. Until then, any figure for the coming year is a forecast.

3Who receives the COLA?

Retirement, spousal, survivor and disability beneficiaries all receive it automatically, and the federal SSI payment rises by the same percentage: to $994 a month for an individual and $1,491 for a couple in 2026. Nothing needs to be activated or confirmed.

The COLA also applies to people who have not yet claimed. From the year you turn 62, every COLA is added to your primary insurance amount, so someone who waits until 67 or 70 to claim still benefits from the adjustments made in the meantime.

Other federal payments use similar adjustments. VA disability compensation has been raised each year by the same percentage, and federal civilian and military retirement pay are adjusted under their own rules based on the same price index.

4How much will your check go up?

The COLA is a percentage of your own benefit, so the dollar increase differs for everyone. Social Security sends a notice showing your new amount, usually in December, and it also appears in your online account.

If you have federal tax withheld as a percentage of your benefit, the withholding rises with it, which also trims the net increase slightly.

5Why your check can rise by less than the COLA

Medicare Part B premiums are usually deducted from Social Security, and they change each year too. In 2026 the standard premium rose by $17.90, using up part of the raise for most beneficiaries with Medicare.

A hold-harmless rule protects most people whose premium is deducted from their benefit: their Part B increase cannot be larger than their COLA in dollars, so their net payment does not fall. It does not protect people who pay their premium directly, people new to Medicare, or people who pay higher income-related premiums. If you are on a Medicare Savings Program, the state pays your premium, so you keep the whole COLA.

6How a COLA can affect other benefits

Programs that count Social Security as income see the raise too. For SNAP, a higher benefit is counted when your state updates your case, which can lower the SNAP amount slightly. In public housing and with Section 8 vouchers, the rent share is 30 percent of adjusted income, so a $50 raise can increase your rent by about $15 at your next review.

There are protections. People who lost SSI because of a COLA but would still qualify without the COLAs received since can often keep Medicaid under a federal rule, and Medicaid programs for people with low incomes often adjust their limits each year as well. If a COLA pushes you just over an income limit, ask the agency whether a disregard applies.

7What changes with a COLA, and what does not

Some program figures move with the COLA: the SSI payment, and through it many SSI-linked limits. Others follow national average wages instead: the taxable maximum, $184,500 in 2026, the earnings test limits and the earnings needed for a work credit. By law those wage-indexed figures rise only in a year when there is a COLA. Medicare premiums are set separately each fall and are not part of the COLA announcement.

8Planning with the COLA in mind

Because the COLA compounds, small yearly raises matter over a long retirement. A $2,000 benefit that rises an average of 2.5 percent a year would be about $3,277 after 20 years. That is one reason delaying a claim, which raises the base the COLAs are applied to, pays off for people who live a long time, and why a surviving spouse who inherits the larger benefit inherits its COLAs too.

The COLA is measured on the spending of working households, not retirees, whose costs lean more on health care and housing, and Medicare premiums have often risen faster than benefits. Treat the COLA as protection against general inflation rather than a guarantee that every cost is covered.

9Watch for COLA scams

Every fall, scammers use the COLA announcement as bait. Social Security will never ask you to activate, confirm or pay for a COLA, never threaten to stop your benefits if you do not call back, and never ask for gift cards or cryptocurrency. Your new amount appears in your online account and in a mailed notice. If a message says otherwise, hang up or delete it; our guide to spotting benefit scams explains how to report it.

10Common mistakes

• Expecting the deposit to rise by the full percentage without allowing for the Part B premium.
• Assuming a COLA has been decided before the October announcement.
• Forgetting to report the new amount when a SNAP or housing agency asks, which can lead to an overpayment later.
• Responding to a message that asks you to activate your COLA.

12What this does not tell you

A COLA is a percentage of your own benefit, so your dollar change will differ from any example here. Medicare premiums, tax withholding and other deductions also change what you receive.

This guide cannot say what the next COLA will be; only Social Security's October announcement does. Check its COLA page for the current and past figures.