Social Security Benefits Are Increasing in 2026 — Here’s What That Means for Your Retirement Plan

Each fall, the Social Security Administration (SSA) announces the annual Cost-of-Living Adjustment (COLA), which determines how much benefits will increase to help keep up with inflation. For 2026, Social Security benefits are set to increase by approximately 2.8%.

While this adjustment is automatic, it plays a very real role in your retirement income plan, especially if you’re currently receiving benefits or planning to claim them within the next few years.

Below, we break down what the change means and how to integrate it into your broader income and tax strategy.

What Is the COLA and How Is It Calculated?

The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When the cost of everyday goods and services rises, Social Security payments adjust to help maintain purchasing power.

You can read more directly from the Social Security Administration SSA: Cost-of-Living Adjustments (COLA) https://www.ssa.gov/cola/

The COLA applies to:

• Retirement Benefits

• Survivor Benefits

• Disability Benefits

What a 2.8% Increase Looks Like in Real Dollars

If your current benefit is:

Monthly Benefit Today	Approx. Increase	2026 Monthly Benefit
$1,500	+$42/month	~$1,542/month
$2,000	+$56/month	~$2,056/month
$3,000	+$84/month	~$3,084/month

Most households can expect several hundred dollars more per year. That increase is helpful, but it’s important to put it into context.

Why This Matters If You’re Nearing or In Retirement

1. Your Expenses May Still Be Rising Faster Than Benefits

Housing, healthcare, and long-term care costs tend to increase faster than CPI-W.The COLA helps — but it may not fully offset your personal inflation. This is why it’s essential to update cash-flow projections regularly.

2. The Increase Could Affect Your Tax Situation

Depending on your income sources, up to 85% of Social Security benefits may be taxable. IRS guidance on taxation of Social Security benefits: https://www.irs.gov/taxtopics/tc423

Even a modest increase could influence:

• Taxable income

• Medicare premium brackets

• Withdrawal strategies from retirement accounts

This is a good time to reevaluate distribution plans.

3. If You Haven’t Claimed Yet — Timing Still Matters

The COLA does not change the benefits you earn by delaying claiming. Delaying benefits up to age 70 may still increase your monthly benefit through delayed credits, separate from the COLA increase.

Planning Considerations for 2025–2026

Planning Topic	What to Review	Why It Matters
Cash Flow	Update your annual retirement income plan	Helps ensure withdrawal sustainability
Withdrawal Strategy	Balance Social Security, IRAs, pensions, real estate income	Reduces unnecessary tax burden
Medicare Premiums	Review your IRMAA brackets	Avoid surprises during open enrollment
Long-Term Care Plans	Consider inflation impacts on care expenses	Helps maintain purchasing power over time

For reference: Medicare IRMAA Brackets & Premium Details https://www.ssa.gov/benefits/medicare/mediinfo.html

Key Takeaway

The 2026 COLA is good news — it provides meaningful support against inflation. But it doesn’t change the fundamentals of retirement planning. Your financial security comes from the coordination of income sources, tax planning, and long-term allocation decisions — Social Security is just one piece.

Want to Review Your Retirement Income Strategy?

This is an excellent time to revisit:

• When to start Social Security (if you haven’t yet)

• How your benefits interact with other income sources

• Whether your cash flow remains aligned with your goals

If you’d like to schedule a retirement income review, we are here to help. We’ll work through your options clearly and at your pace.

Contact Us

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About Rigden Capital Strategies

Rigden Capital Strategies was founded on a simple belief: financial advice should be personal, transparent, and centered around your goals—not built on generic models or product-driven sales. With decades of combined industry experience, we’ve developed a process grounded in three core values: value, integrity, and progress.

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Disclosure: This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information provided. Investment decisions should be based on individual circumstances, and we recommend consulting a qualified professional before implementing any financial, legal, or tax strategies. Past performance is not indicative of future results, and all investments carry risks, including potential loss of principal. No investment strategy can guarantee success or protect against loss in all market conditions. Investors should carefully consider their risk tolerance, investment objectives, and financial circumstances before making investment decisions.