Social Security Administration Announces COLA Increase
The Social Security Administration shared its annual cost-of-living adjustment (COLA) on Wednesday, revealing that nearly 72 million retirees will see a 3.6 percent boost in their benefits next year.
Commissioner Frank J. Bisignano mentioned that this increase, averaging an additional $75 per month, aims to provide retirees and disabled workers with “greater financial stability.” The COLA is determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers, as assessed by the Bureau of Labor Statistics (BLS).
Data released by the BLS on the same day indicated that the Consumer Price Index rose 3.7 percent on an annual basis, up from the 3.4 percent rate noted in August. A significant 9.1 percent increase in gasoline prices during September contributed to over half of the month’s consumer price gains. Year-over-year, gas prices surged by 34.2 percent, while fuel oil prices jumped by 74.2 percent.
Social Security operates as a pay-as-you-go system, where payroll taxes collected from today’s workers are not saved or invested into their individual accounts. Instead, these taxes are used right away to fund current benefits for retirees and disabled individuals. Any taxes not distributed as monthly benefits are deposited into federal trust funds, managed by the U.S. Treasury, and are invested in special-issue Treasury bonds.
As older generations receive more benefits, there’s a growing concern that inflation is diminishing wage gains for those still in the workforce.
A chart shared by Heather Long, chief economist at Navy Federal Credit Union, illustrated that U.S. wage growth has fallen to a five-year low. Long pointed out that wage increases for typical workers have been entirely offset by inflation since April.
The financial pain is real: Wage growth fell to 3% (y/y) in September. That’s the lowest in 5 years. Wage growth: 3% Inflation: ~3.4% Inflation has eaten up all wage gains for the average worker since April. Many people are having to make hard choices about what to buy and what to skimp on right now. Yes, consumption is still strong (mainly due to wealthier Americans and people dipping into savings or credit cards), but a lot of people have to think hard about every dollar they spend. Notable: Wages only ticked up 0.1% in the month of September. That was the weakest monthly gain since December 2025.
— Heather Long (@byHeatherLong) October 2, 2026
Long also emphasized that while consumer spending seems “still strong,” this is driven mainly by higher-income households, credit card reliance, and dwindling savings, leaving many to scrutinize every purchase they make.
A different chart posted by Jack Salmon, a research fellow at George Mason University’s Mercatus Center, depicted the median household net worth by age since 1989. According to data from the Survey of Consumer Finances and the Federal Reserve, older Americans over 75 have experienced significant increases in their net worth, whereas younger individuals under 35 have seen little to no growth.
If your solution to Social Security insolvency involves raising taxes on the blue line to give more benefits to the orange line, you should at least acknowledge the profound intergenerational injustice involved.
— Jack Salmon (@_JackSalmon_) October 13, 2026
Following the COVID-19 pandemic, a report from the Federal Reserve, released earlier in October, noted a widening economic gap between affluent Americans and everyone else.
The Fed’s 2025 Survey of Consumer Finances reported that the overall median family net worth grew by 2 percent to nearly $216,000 between 2022 and 2025. However, stark generational differences emerged in that timeframe: the net worth for those under 35 fell by 23 percent to about $33,000, while for individuals aged 75 and above, it rose by 37 percent to around $504,900.
