The Social Security Administration has announced a 2.8% rise in the cost-of-living adjustment (COLA) for 2026, resulting in an average monthly benefit hike of over $56 for retirees, as stated by agency officials on Friday.

This adjustment will impact nearly 71 million Social Security beneficiaries starting in January, while approximately 7.5 million individuals receiving Supplemental Security Income will notice increased payments beginning December 31.

The announcement, originally scheduled for last week, faced a delay due to the federal government shutdown, but was finally made public on Friday.

The COLA for retirees and those with disabilities is funded through payroll taxes from employees and employers, capped at a certain salary threshold. This cap is set to rise to $184,500 in 2026, up from $176,100 in 2025.

Beneficiaries saw a 2.5% increase in 2025, following a 3.2% rise in 2024, which came after a significant 8.7% boost in 2023, driven by the highest inflation rates in four decades.

The smaller increase for 2026 reflects moderating inflation.

Social Security Administration Commissioner Frank Bisignano said in a statement Friday that the annual cost of living adjustment “is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security.”

Emerson Sprick, the Bipartisan Policy Center’s director of retirement and labor policy, said in a statement that cost-of-living increases “can’t solve all the financial challenges households face or all the shortcomings of the program.”

The latest COLA announcement comes as the Social Security Administration has been navigating almost a year of turmoil, including the termination of thousands of workers as part of the Trump administration’s efforts to shrink the size of the federal workforce. Trump administration officials have also made statements they later walked back that raised concerns about the future of the program.

Treasury Secretary Scott Bessent said in July that the Republican administration was committed to protecting Social Security hours after he said in an interview that a new children’s savings program President Donald Trump signed into law “is a back door for privatizing Social Security.”

And in September, Bisignano had to walk back comments that the agency is considering raising the retirement age to shore up Social Security. “Raising the retirement age is not under consideration at this time by the Administration,” Bisignano said at the time in an e-mailed statement to The Associated Press.

“I think everything’s being considered, will be considered,” Bisignano said in the statement when asked whether raising the retirement age was a possibility to maintain the old age program’s solvency.

In addition, the Social Security Administration faces a looming bankruptcy date if it is not addressed by Congress. The June 2025 Social Security and Medicare trustees’ report states that Social Security’s trust funds, which cover old age and disability recipients, will be unable to pay full benefits beginning in 2034. Then, Social Security would only be able to pay 81% of benefits.

Social Security benefits were last reformed roughly 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67.