For many of the more than 70 million Americans who receive a monthly Social Security benefit, their payout isn't a luxury -- it's a necessity.

For 24 years, pollster Gallup has been surveying retirees annually to determine how reliant they are on the income they receive from Social Security. Gallup has consistently found that 80% to 90% of respondents require their Social Security payout, to some degree, to cover their expenses. Knowing how much they'll receive each month is vital to the financial well-being of aged beneficiaries.

The good news for these traditional Social Security recipients -- retired workers, survivors of deceased workers, and workers with disabilities -- is that turning the page to a new year means a higher nominal monthly benefit check is headed their way. While this above-average increase is bound to put smiles on the faces of beneficiaries, the 2026 raise they're receiving is a double-edged sword for most recipients.

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Monthly Social Security benefits just increased in historic fashion

On a near-annual basis, Social Security payouts are adjusted to account for the effects of inflation (rising prices) that beneficiaries are facing. This increase in benefits is known as the cost-of-living adjustment (COLA).

Since 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been the inflation measuring stick the Social Security Administration (SSA) has relied upon to calculate the program's COLA. Although the CPI-W is reported monthly and is based on trailing 12-month price data spanning more than 200 weighted spending categories, only readings ending in the months of July, August, and September factor into Social Security's COLA calculation.

Following a nine-day delay tied to the longest-ever federal government shutdown, the SSA revealed a 2.8% cost-of-living adjustment on Oct. 24 for 2026.

This increase is noteworthy in two respects. To begin with, it's modestly higher than the average Social Security COLA of 2.3% since 2010. Above-average raises are generally a welcome sight for those who rely on their Social Security check as a needed source of income.

Secondly, it marks the first time in almost three decades that Social Security's COLA has risen by at least 2.5% for five consecutive years. This follows respective raises of 5.9%, 8.7%, 3.2%, and 2.5% from 2022 through 2025. On a nominal-dollar basis, Social Security checks have been notably increasing over the last half-decade.

But it's one thing to talk percentages and an entirely different story when examining what those percentages will do to the average Social Security check.

According to estimates from the SSA's 2026 COLA Fact Sheet, the average monthly retired-worker benefit is expected to climb by $56 to $2,071 in the new year. This works out to an extra $672 annually for the average retired worker.

Meanwhile, the average monthly check for the more than 7.1 million workers with disabilities currently receiving a payout is projected to increase by $44 to $1,630 in 2026.

Although the SSA didn't list survivor beneficiaries in its January 2026 estimates, the average monthly survivor benefit check is very similar to that of disabled workers. Based on the SSA's November snapshot, monthly survivor benefits should, on average, rise by $44 to $1,618 in the new year.

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Social Security's 2026 COLA is a double-edged sword for most beneficiaries

While sizable nominal-dollar benefit increases are officially headed to more than 70 million traditional Social Security recipients, many of these individuals are likely to end up disappointed.

The goal of Social Security's annual COLA is to help beneficiaries keep up with the prevailing rate of inflation so they don't lose purchasing power over time. However, the CPI-W has inherent flaws that make this task virtually impossible.

As its full name implies, the CPI-W is tasked with tracking the inflationary pressures faced by "urban wage earners and clerical workers." Most of these individuals are working-age Americans who aren't currently receiving a retired-worker benefit from Social Security.

More importantly, they spend their money differently than retirees aged 62 and above. Expense categories that bear more importance for seniors, such as shelter and medical care services, aren't given any added weighting in the CPI-W.

Furthermore, the trailing 12-month inflation rate for shelter and medical care services has consistently been higher than the COLAs received by retired workers. If these important expenses continue rising at a faster pace than Social Security benefits, there's a heightened probability of a loss of buying power.

But this is only part of the story. Retired workers enrolled in traditional Medicare may face a double-edged sword in 2026, as well.

Traditional Medicare has two core segments: Parts A and B. Part A, which covers inpatient care at hospitals, has no cost for approximately 99% of recipients. Meanwhile, Part B, covering outpatient services such as doctor visits, does have a monthly premium. For retired workers receiving a monthly Social Security benefit, their Medicare Part B premium is almost always deducted from their payout.

In 2026, the Centers for Medicare and Medicaid Services announced a 9.7% jump in the base Part B premium, resulting in a $17.90 monthly increase to $202.90. Though this nearly double-digit percentage increase is going to partially offset Social Security's COLA for tens of millions of retirees, it might fully offset the 2.8% COLA for lifetime low earners.

Although Social Security's 2026 COLA may have recipients seeing dollar signs, the purchasing power of a Social Security dollar remains weak.