Core Points - The Social Security Administration announced a 2.8% cost-of-living adjustment (COLA) for 2026 [1] - This adjustment will benefit approximately 75 million Americans receiving Social Security and Supplemental Security Income payments [1] Summary by Category - **Cost-of-Living Adjustment (COLA)** - A 2.8% COLA has been set for 2026 [1] - **Beneficiaries** - Approximately 75 million Americans will benefit from this adjustment [1]

Drozd Irina / Shutterstock.com Quick Read The Fed lowered its benchmark interest rate three times this year. The Fed may opt to hold interest rates steady in 2026 based on economic conditions. Social Security COLAs are based on inflation and are not directly affected by Fed rate decisions. If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here   The Fed ...

Core Points - The Federal Reserve cut interest rates for the third consecutive time, reducing the benchmark rate by a quarter point to a range of 3.50% to 3.75% as of December 10, 2025, reflecting a total drop of 0.75% since January 2025 [1][2] - The decision to cut rates was made with a split vote of 9-3, indicating some internal disagreement, and future rate cuts may be paused as the Fed will assess incoming data and evolving economic conditions [2][7] - The rate cut may lead to a lower Cost of Living Adjustment (COLA) for Social Security benefits in 2027, with early projections suggesting a COLA increase in the range of 2.3% to 2.6%, which would be the smallest increase since 2020 [4][7] Economic Impact - The Fed's decision to lower rates could have significant implications for retirees who depend on Social Security, as it may result in a smaller benefits increase than they have become accustomed to [4][6] - The formula for calculating Social Security benefits is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which means the Fed's actions indirectly influence the inflation rate that affects these benefits [5][6] - The Fed aims to maintain a stable inflation rate of around 2% while supporting a strong labor market, which is a key aspect of its monetary policy [6]

Steve Heap / Shutterstock.com Quick Read Social Security COLAs are tied to CPI-W inflation data from July through September, not to Federal Reserve interest rate decisions. The 2026 COLA is locked at 2.8% and will not change due to recent Fed rate cuts. Lower rates could stimulate spending and raise inflation in 2026, potentially increasing the 2027 COLA. A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more her ...

Core Insights - The purchasing power of Social Security benefits has declined due to inadequate Cost of Living Adjustments (COLAs) that fail to keep pace with inflation, particularly affecting retirees who have different spending habits compared to urban wage earners [1][2] - Social Security benefits are a primary income source for many retirees, but their value has decreased to approximately $0.80 on the dollar compared to 2010 levels [2] - The Federal Reserve's recent interest rate decisions, including a quarter-percentage-point cut, could significantly influence future COLAs for retirees [3][5] Economic Impact - The December 2025 rate cut by the Federal Reserve marks the end of three rate reductions for the year, lowering the benchmark rate to a range of 3.5%-3.75% [5] - In 2026, retirees are projected to receive a 2.8% COLA, but this may not be sufficient given the inflation trends, with estimates for 2027 potentially dropping to between 2.3% and 2.6% [6][7] - The Federal Reserve's decision to cut rates suggests a belief that high inflation will not persist, which may lead to more modest COLAs in the near future [8][9] Future Projections - The COLA for 2027 is expected to be lower due to the Fed's recent rate cuts and forecasts of Personal Consumption Expenditures inflation at 2.4% for 2026 and 2.1% for 2027 [7][12] - While a smaller COLA may seem negative, it could indicate a stabilization in prices that would alleviate financial stress for retirees [11][12]