The historic Social Security Cost of Living Adjustment (COLA) in 2026 will make retired workers’ checks in nominal dollars significantly higher than the national average.
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News told by money
More than 53 million retired workers make up the majority of Social Security beneficiaries, and their monthly payments are more than just a check. This represents a financial lifeline for them that they would have difficulty getting by without.
According to an analysis by the Center on Budget and Policy Priorities, Social Security will lift 22 million people above the federal poverty line in 2023, 16.3 million of whom were adults 65 and older. Meanwhile, Gallup’s 24th annual survey (2002-2025) shows that 80% to 90% of retirees surveyed need some form of Social Security income to survive.
For Social Security recipients, there are few events more exciting than the Cost of Living Adjustment (COLA) announcement, which typically occurs between October 10th and 15th of each year. Due to the federal government shutdown, it was postponed this year to October 24th.
While all types of Social Security recipients, including retired workers, disabled workers, and survivors, can expect historic raises in the new year, the average benefit for retirees in five states will rise more than the national average.
Social Security’s 2026 COLA is historic
On October 24, the Social Security Administration (SSA) announced that a 2.8% COLA will be paid to beneficiaries by 2026.
On the surface, a 2.8% increase is nothing to write home about. From 2022 to 2024, the respective COLAs will remain at 5.9%, 8.7%, and 3.2%, with the 8.7% increase in 2023 being the largest percentage increase since 1982. Next year’s 2.8% dividend increase will be slightly higher than the average COLA of 2.3% since 2010.
But the 2026 cost-of-living adjustment is nevertheless historic. This will be the first time this century that recipients have received at least a 2.5% pay increase for five consecutive years. The last time this feat was achieved was from 1988 to 1997, when COLA was recorded between 2.6% and 5.4% on an annual basis.
Based on SSA projections, a 2.8% cost-of-living adjustment in 2026 would increase average monthly benefits for retired workers by $56 to $2,071. In May, average monthly payments to retired workers exceeded $2,000 for the first time in the program’s history.
For workers with disabilities, their average monthly check is estimated to increase by $44, from $1,586 to $1,630, when the calendar officially changes to 2026.
All 70 million traditional Social Security recipients will receive the increase in 2026, but in nominal terms it would have a bigger impact on retired workers in five states.
Social Security retired worker benefits are expected to increase the most in these five states in 2026
Each year, SSA releases an annual statistical supplement that provides detailed analysis of how benefits are provided. Among the extensive list of categories covered is a detailed geographic breakdown of average and median benefits by state for the three major beneficiary types: retired workers, disabled workers, and survivor beneficiaries. This example focuses specifically on the average benefit amount for retired workers.
The latest statistical supplement does not take into account the 2.5% COLA passed in 2025 or the recently announced 2.8% increase that beneficiaries will receive next year. However, I would like to do some calculations.
Considering the 2025 and 2026 COLAs, retirees in the following five states can expect the largest Social Security increases in nominal dollars next year:
- connecticut: Average monthly retirement benefit is expected to increase by $60.66 to $2,227.05.
- new jersey: Average monthly retirement benefit is expected to increase by $60.57 to $2,223.74.
- new hampshire: The average monthly retirement benefit is expected to increase by $60.11 to $2,206.90.
- Delaware: Average monthly retirement benefit is expected to increase by $59.97 to $2,201.81.
- maryland: Average monthly retirement benefit is expected to increase by $58.96 to $2,164.77.
Perhaps the biggest reason retirees in these five states receive larger nominal raises on average than the national average comes down to their earnings history.
When the SSA calculates a worker’s monthly severance pay, four factors are considered:
The latter two relate to the year a worker was born and the age at which they first claim retirement benefits, while the first two factors are based on how many hours a worker worked and how much they earned on average each year. SSA considers your 35 highest inflation-adjusted years of earnings when calculating your monthly payments. In other words, people who earn a higher average wage or salary over their lifetime can expect to receive more monthly benefits from Social Security.
Based on 2024 U.S. Census Bureau data, New Hampshire ($111,800), Maryland ($109,700), New Jersey ($103,500), and Connecticut ($99,240) rank second, third, sixth, and eighth in median household income, excluding the District of Columbia, based on U.S. Census Bureau data. If residents of these states have high-paying jobs, that explains why their Social Security retiree benefits are higher than the national average.
Another factor to consider is that higher median household incomes may make it easier for workers to grow their wealth through retirement savings and investments. People who can save large sums of money for retirement may be able to delay claiming Social Security benefits. This means that retired workers’ monthly payments will continue from age 62 to age 70 and could increase by up to 8% annually.
There can be significant benefits to waiting to collect from Social Security, both in terms of average monthly benefits and lifetime earnings collected from Social Security.
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