Starting in January 2026, many federal retirees can expect to see a 2.8% increase in their Social Security benefits and federal retirement annuities due to a cost-of-living adjustment (COLA). This increase, which is higher than last year’s adjustment, is designed to help retirees keep pace with rising inflation. Approximately 75 million people, including retirees and individuals with disabilities, benefit from Social Security adjustments each year.
However, retirees under the Federal Employees Retirement System (FERS) will receive a more modest adjustment, referred to as a “diet” COLA, amounting to 2%. This disparity is based on a formula that determines the COLA for FERS retirees, wherein they receive 1% less than the full COLA if the adjustment exceeds 3%, 2% if the adjustment is between 2% and 3%, and full COLA if it is less than 2%.
The Social Security Administration had initially intended to announce the 2026 COLA last week but decided to postpone the announcement due to the ongoing government shutdown, which now ranks as the second-longest in history. As a result of this increase, Social Security retirement benefits are expected to rise by approximately $56 per month in the upcoming year.
The National Active and Retired Federal Employees Association (NARFE) has raised concerns, stating that the 2026 COLA does not adequately address the anticipated 12% increase in health insurance premiums for federal employees and retirees. SSA Commissioner Frank Bisignano remarked that “Social Security is a promise kept,” emphasizing that the annual COLA is an essential mechanism for ensuring benefits reflect current economic conditions and continue to offer a secure foundation for recipients.
Historically, annual COLA increases have averaged around 2.6% over the last decade. However, the adjustments have varied significantly in recent years. For example, the 2023 COLA was marked at 8.7%, the largest increase in over four decades, whereas the 2024 adjustment was much more modest at 3.2%. Consequently, FERS retirees saw adjustments of 7.7% in 2023 and 2.2% in 2024.
The upcoming adjustments signal a hopeful step toward ensuring the financial stability of federal retirees amidst fluctuating economic conditions. While challenges remain, the increase in COLA demonstrates a commitment to meeting the needs of those who have dedicated their careers to public service.