How does the Social Security cost-of-living adjustment (COLA) work?

SSA announces the next year's COLA in the second or third week of October every year. The exact day depends on when the Bureau of Labor Statistics releases the September CPI-W reading — SSA can't compute the COLA until that number lands, and BLS publishes it in mid-October.

The 2026 COLA was announced October 24, 2025, and confirmed at 2.8 percent. SSA posts it to ssa.gov/cola the same morning, and individual notices go out by mail and in my Social Security accounts in early December.

SSA averages the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) for July, August, and September of the current year. It compares that average to the same three-month average from the prior year (or, if there was no COLA last year, to the last year a COLA was paid).

The percentage difference, rounded to the nearest 0.1 percent, is the COLA. The statutory authority is Section 215(i) of the Social Security Act, codified at 42 USC 415(i). For 2026, comparing Q3 2024 to Q3 2025 CPI-W produced a 2.8 percent increase.

If you're more interested in the dollar impact than the formula, see the next card. → Show me the dollar impact

Most retirees on Social Security have their Medicare Part B premium pulled directly from their monthly check. If Part B goes up faster than your COLA in dollar terms, the net deposit can shrink — except the hold-harmless rule (42 USC 1395r(f)) caps Part B's premium increase at the dollar value of your COLA, so the net check can't go down for most beneficiaries.

Hold-harmless does NOT apply if you pay IRMAA (high-income surcharge), if you enrolled in Medicare for the first time during the year, or if Medicaid pays your Part B premium for you. In those cases, the full Part B increase comes through.

If you're not yet on Medicare, this card doesn't affect you yet. → I'm not on Medicare yet

The COLA cannot be negative. If CPI-W declines or stays flat year over year, COLA is set at zero percent and benefits don't drop. The most recent zero-COLA years were 2010, 2011, and 2016.

In a zero-COLA year, Medicare Part B premiums also can't rise for hold-harmless beneficiaries (the same statute), so most retirees see flat checks rather than smaller ones. Premiums catch up the next year a COLA is paid.

A COLA increases your gross Social Security income, which feeds into the IRS combined-income test. If your combined income (adjusted gross income plus tax-exempt interest plus half your Social Security) crosses into the taxable range, up to fifty percent or eighty-five percent of your benefit becomes taxable.

The combined-income thresholds in IRS Publication 915 don't index for inflation, so each year's COLA can move more retirees into a higher taxable bracket. This is why some retirees feel like the COLA didn't help — the IRS took some of it back.

SSI receives the same COLA percentage as Social Security retirement and disability. The federal benefit rate (FBR) for individuals and couples adjusts every January with the COLA. State supplements that some states pay on top of the federal SSI benefit follow each state's own rules.

One timing quirk: SSI's January payment is delivered on December 31 of the prior year (because January 1 is a federal holiday and SSI rules push the date earlier rather than later). So SSI recipients see the COLA-adjusted check the day before retirement beneficiaries do.

If you're helping a parent budget, the December COLA notice is the document you want — it shows the new gross benefit, the Medicare Part B premium being deducted, and the net deposit. SSA mails it; it also posts in their my Social Security account if they have one set up.

Watch three things: any IRMAA bracket they may have crossed (look at last year's tax return), whether they're new to Medicare this year (no hold-harmless protection), and whether the COLA pushed them above a state property-tax exemption income limit. These three together explain almost every “my COLA disappeared” question I get from adult children.

Short answer: no, not directly. Your pre-claim Primary Insurance Amount (PIA) is calculated using the Average Wage Index (AWI), not the CPI-W COLA. AWI updates the bend points and indexes your past earnings each year until you file. COLA only starts applying to your benefit after you become entitled (typically the year you turn 62, even if you delay claiming).

If you're delaying past 62, your benefit grows from delayed retirement credits and from each year's COLA layered on top. Both compound. SSA explains the AWI series at ssa.gov/oact/cola/awidevelop.html.

If none of these situations match, the calculation page walks through the full PIA formula. → See how my benefit is calculated