This past weekend, the Social Security Administration announced a 2.8% cost-of-living adjustment (COLA) for 2026. Starting in January, monthly benefits will rise by that amount—welcome news, though modest in the face of higher healthcare and housing costs.
Here’s what that means for different groups—and what our team is doing to help many of you prepare.
If You’re Already Receiving Social Security
Your January 2026 benefit will rise by 2.8%. It’s a helpful boost, but Medicare premiums and real-life inflation may offset some of the gain.
- If you’re a financial-planning client with us, no action is needed. We build your plan with conservative COLA assumptions and monitor inflation versus expenses, so this update is reflected in your projections automatically. And many of you were not dependent on this income in the first place.
- If we’re not currently running your plan, check that your retirement model uses realistic assumptions for both COLA and expenses. Even small gaps compound over time.
If You Plan to File in the Next Five Years
Timing remains more powerful than COLA changes. Delaying benefits can increase lifetime income far more than a small annual adjustment. But you also need to account for future Social Security cuts, which we’ll discuss below.
- For our planning clients, we already test multiple claiming ages and income levels to help optimize benefits alongside your other retirement income.
- If you manage your plan independently, model future COLAs conservatively (around 2.5%) and be sure to coordinate benefit timing with tax and business-income decisions.
If You’re Still Years Away From Claiming
Modest COLAs highlight a larger reality: Social Security will likely replace less of future retirees’ income, especially after 2033 when the trust fund may require adjustments.
- We account for that by assuming slow benefit growth and designing plans that rely primarily on business value, investments, and other income streams—not Social Security alone.
- If you’re building your plan elsewhere, test scenarios with smaller benefit increases and verify that you could maintain your lifestyle even if future payouts are reduced.
The Bottom Line
As much as we welcome COLA adjustments, we know that the larger issue remains the (in)solvency of Social Security: without bipartisan Social Security reform, the system is scheduled to reduce in 2033. We talk about this every time we bring up Social Security in our client meetings. We all need to be prepared not to rely too heavily on these pension payments…they are not guaranteed.
A 2.8% COLA is good news, but it doesn’t remove the need for thoughtful, proactive planning. For clients, you can relax, knowing these updates are already integrated into your plan.
If you’re unsure how this change—or future Social Security shifts—fits your broader plan, we’d be happy to walk through it together.
Investment advisory services are offered through Keating Financial Advisory Services (KFAS), a registered investment advisor. Advisory services are provided pursuant to a written agreement and KFAS’s Form ADV Part 2A. Projections and assumptions used in financial planning are not guarantees of future results. Clients may incur separate fees and expenses from custodians or product providers. Social Security benefit estimates and COLA projections are subject to change based on federal policy decisions.