"Some Social Security recipients may be excited about their upcoming raise for 2026. Next year, Social Security benefits are getting a 2.8% cost-of-living adjustment, or COLA. The Social Security Administration puts the average monthly benefit at $2,015 before the 2026 COLA takes effect, and $2,071 after the COLA gets applied. This means the typical Social Security recipient could see their monthly income rise by $56, or $672 on an annual basis."
"But while you may be looking forward to your Social Security COLA, you should know that it's important to have realistic expectations about what it will and will not do for your finances. Don't expect your Social Security COLA to make a huge dent If money is tight in retirement, any raise you can get your hands on is better than nothing. But you shouldn't expect your upcoming Social Security COLA to improve your financial picture in a meaningful way."
"Social Security COLAs are designed to help benefits keep up with inflation. However, they are not designed to beat inflation. If you want your income to beat inflation, you're going to need it to come from sources other than Social Security alone. An investment portfolio, for example, might generate enough income to beat inflation, especially if you choose the right dividend stocks or ETFs."
Social Security benefits will receive a 2.8% cost-of-living adjustment for 2026, raising the average monthly benefit from $2,015 to $2,071. That increase equals about $56 more per month and $672 annually for the typical recipient. The COLA is intended to help benefits keep pace with inflation rather than exceed it. Recipients who are financially strained should not expect the COLA alone to cover substantial shortfalls. Income sources beyond Social Security, such as dividend-paying investments or other portfolio returns, may be necessary to achieve income growth that outpaces inflation.
Read at 24/7 Wall St.
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