The new year will bring a Social Security cost-of-living adjustment (COLA) of 2.8%, a slight step up from the 2.5% increase beneficiaries received in 2025. It also marks the first time since the 90s that recipients are seeing five consecutive years of raises 2.5% or greater.
The Social Security Administration (SSA) said the average monthly benefits for retired workers will rise by $56 to $2,071 in Jan. 2026, after the COLA increase.
Although all recipients will see the increase, in some states it will translate to a greater increase in actual dollar terms than $56.
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The Motley Fool found that Connecticut, New Jersey, New Hampshire, Delaware and Maryland will see, on average, the greatest nominal-dollar raises (1).
Why these five states rise the most
Motley Fool contributing analyst Sean Williams said he did the math by looking at state-wise benefit data from the SSA’s Annual Statistical Supplement and factored in 2025’s 2.5% increase and 2026’s 2.8% increase.
In Connecticut, he says, the average monthly check is expected to rise by $60.66 to $2,227.05. New Jersey retirees are projected to see a $60.57 increase, bringing average benefits to $2,223.74, while New Hampshire and Delaware retirees will see jumps of $60.11 and $59.97, respectively. Even Maryland, fifth on the list, is expected to see an average increase of $58.96, lifting monthly benefits to $2,164.77.
It’s hard to pinpoint exactly why these states have higher than average Social Security benefits, but there is one key contributor.
Social Security benefits are linked to earnings history, and Connecticut, New Jersey, New Hampshire and Maryland are all among the top 10 states by median household income, according to Census Bureau data. States where retirees earned higher lifetime wages tend to receive higher Social Security payments, which means the same percentage increase results in more dollars.
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Another factor, Williams points out, is that in states where the median household income is higher, people may be more likely to delay taking Social Security, which would mean larger checks. It’s important to note that Massachusetts, New Jersey, Connecticut and New Hampshire are also among the most expensive states to retire in, according to GOBankingRates, so retirees in these places will be coping with cost pressures (2).
What a 2.8% COLA really means — and how retirees can make the most of it
The Social Security Administration recalculates benefits every year using a formula based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When inflation rises, benefits rise — at least partially — to help retirees maintain purchasing power. The formula is automatic, which protects the program from the political tug-of-war that surrounds so many other federal benefits.
While the bump will help retirees keep pace with persistent price pressures, analysts stress the 2026 adjustment is modest by historical standards – especially compared with the unusually large, inflation-fueled jumps of 5.9% in 2022 and 8.7% in 2023. Over the last decade the increase has averaged about 3.1%.
The 2026 COLA “is laughably misaligned with the expenses seniors have,” Aaron Brachman, an executive with the Washington Wealth Group at Steward Partners in Washington, D.C. told U.S. News & World Report, citing health care costs in particular (3).
Even though inflation has cooled from its extremes, prices for essentials like housing and groceries remain significantly higher than they were before the pandemic. Many retirees have spent the past several years absorbing price increases without receiving commensurate benefit growth.
“COLA might reflect the inflation rate, but it is woefully insufficient for older Americans who already have high health care costs and are facing even greater increases in their Medicare costs in 2026,” said Ramsey Alwin, president and CEO of the National Council on Aging (4). “This 2.8% COLA will not even cover the projected increases in Medicare premiums and deductibles, which are expected to range between 4% and 12%. Once again, older adults will have to make heart-wrenching decisions about whether to spend their fixed incomes on health care, food, or housing.”
But even this modest increase can strengthen a retiree’s financial footing if the money is allocated intentionally. That makes smart budgeting essential.
Retirees may want to start by reviewing their health-related expenses to see whether the COLA can help cover premium increases or create more room for recurring pharmacy costs. Strengthening emergency savings is another high-impact move; even an extra $50 to $100 a month can help build a cushion.
For retirees who carry credit balances or other high-interest debt, applying part of the COLA to extra payments can yield some savings.
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Article sources
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The Motley Fool (1); GOBankingRates (2); U.S. News & World Report (3); National Council on Aging (4)
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