For millions of retirees in the United States, the annual Social Security Cost-of-Living Adjustment (COLA) is one of the most important financial updates of the year. This adjustment decides how much extra money they will receive to help keep up with rising prices.
In October 2025, the Social Security Administration (SSA) will announce the COLA for 2026, and while it may bring a historic increase, experts warn that it could still end up being a no-win situation for retirees.
In this article, we will break down how COLA works, why the 2026 adjustment is unique, what it means for retirees, and why Medicare Part B premiums might cancel out much of the increase.
What Is Social Security COLA and Why It Matters
The Cost-of-Living Adjustment (COLA) is designed to make sure retirees don’t lose purchasing power when inflation rises.
- Before 1975, Congress decided COLAs through special votes.
- Since 1975, COLAs are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
- Only July, August, and September CPI-W readings are used to calculate the next year’s COLA.
For example:
If the cost of goods and services goes up by 2.5%, then Social Security benefits also rise by 2.5% to balance inflation.
Why Retirees Rely on Social Security Payments
As of mid-2025, around 53 million retirees receive Social Security checks. The average monthly benefit is about $2,005, which may not sound large but is essential for most retirees:
- Surveys show 80% to 90% of retirees rely on Social Security to cover their basic expenses.
- For many, this payment is the main source of income in retirement.
- Knowing how much they will receive in 2026 is critical for financial planning.
Recent COLA History (2022–2025)
Over the last few years, COLAs have been much higher than usual due to pandemic-driven inflation.
| Year | COLA Increase | Notable Details |
|---|---|---|
| 2022 | 5.9% | Highest in years after COVID-19 inflation |
| 2023 | 8.7% | Biggest increase in 41 years |
| 2024 | 3.2% | Still above the long-term average |
| 2025 | 2.5% | Slightly above the 16-year average (2.3%) |
The 2026 COLA is expected to be around 2.7%, according to forecasts by The Senior Citizens League (TSCL) and independent policy experts.
Why the 2026 COLA Could Make History
If the 2026 COLA ends up above 2.5%, it will mark the fifth consecutive year of above-average increases. The last time this happened was between 1988 and 1997, almost three decades ago.
Forecasts show:
- 2.7% COLA in 2026 (expected)
- This means an average $54 monthly increase for retired workers.
- Inflation caused by tariffs and higher costs is partly responsible.
On the surface, this looks like good news for retirees. But the reality is more complicated.
The No-Win Scenario for Retirees
Even though the 2026 COLA may set a record, it does not guarantee financial relief. Here’s why:
1. Loss of Purchasing Power
Between 2010 and 2024, the value of Social Security dollars dropped by 20%.
- In 2010, $100 in Social Security benefits could buy $100 worth of goods.
- By 2024, that same $100 could only buy $80 worth.
- This shows how inflation eats away at benefits.
2. Flawed Inflation Index
COLAs are based on the CPI-W, which tracks the spending of working-age Americans, not retirees.
- Retirees spend more on healthcare and housing.
- These costs rise faster than the overall inflation measured by CPI-W.
- As a result, COLA increases often fail to match real expenses.
3. Medicare Part B Premiums Rising
The biggest concern for 2026 is the expected jump in Medicare Part B premiums.
- Current premium: $185 per month (2025)
- Forecast for 2026: $206.20 per month
- That’s an 11.5% increase — the largest since 2022.
Since Medicare Part B premiums are deducted directly from Social Security checks, many retirees will see their COLA increase wiped out.
2026 COLA VS Medicare Part B Premium Impact
| Category | 2025 | 2026 (Forecast) | Change |
|---|---|---|---|
| Average Retired Worker Benefit | $2,005 | $2,059 | +$54 |
| Medicare Part B Premium | $185 | $206.20 | +$21.20 |
| Net Monthly Gain | — | Only $32.80 | Minimal benefit |
This clearly shows why retirees may gain little to nothing from the COLA.
The 2026 Social Security COLA is expected to be about 2.7%, making it the fifth consecutive year of above-average increases. While this sounds promising, the reality is that rising Medicare premiums and the loss of purchasing power mean retirees will likely not feel much benefit.
This situation highlights the flaws in the COLA system, which doesn’t reflect the real expenses of retirees, especially healthcare and housing. Unless the formula changes, retirees will continue facing financial challenges, no matter how high COLA percentages go.
FAQs
What is the expected Social Security COLA for 2026?
The 2026 COLA is estimated to be 2.7%, which means an average increase of about $54 per month for retirees.
Why is the 2026 COLA considered a no-win scenario?
Because Medicare Part B premiums are rising sharply, much of the COLA increase will be canceled out, leaving retirees with very little net gain.
How much will Medicare Part B premiums rise in 2026?
They are expected to rise by 11.5%, from $185 to $206.20 per month, the biggest increase since 2022.