Every year, seniors rely on Social Security to cover daily expenses like groceries, bills, and healthcare. But with rising prices and inflation, even a fixed income can feel tight.
To help retirees, the Social Security Administration (SSA) gives a Cost-of-Living Adjustment (COLA) each year. This adjustment is meant to increase benefits to keep up with inflation.
However, in 2026, many seniors will see far less than the headline increase due to rising Medicare costs and other deductions.
What is COLA and How Does it Work?
COLA, or Cost-of-Living Adjustment, is an annual increase in Social Security benefits. Its main goal is to protect retirees from inflation, which is the rise in prices for goods and services.
Seniors and other fixed-income beneficiaries are the most affected by inflation because their benefits don’t change unless adjusted.
The SSA calculates COLA by checking the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the months of July, August, and September. They compare it to the same months of the previous year.
If prices have increased, that percentage becomes the COLA for the next year’s Social Security benefits.
2025 and 2026 COLA Numbers
In 2025, Social Security benefits went up by 2.5%. For 2026, the SSA announced a 2.8% COLA, which is slightly higher than the previous year. While this percentage seems decent, rising healthcare costs mean that the net increase seniors actually get is smaller.
Average Social Security Benefits After 2026 COLA
Here is how the new 2.8% COLA affects common Social Security payments based on August 2025 data:
| Benefit Type | Average 2025 Payment | 2026 COLA Increase | New 2026 Payment |
|---|---|---|---|
| Retired Workers | $2,008.31 | $56.23 | $2,064.54 |
| Spousal Benefits | $954.93 | $26.74 | $981.67 |
| Survivor Benefits | $1,575.30 | $44.11 | $1,619.41 |
| Disability Benefits | $1,445.72 | $40.48 | $1,486.20 |
Rising Medicare Premiums
Many seniors have Medicare premiums automatically deducted from their Social Security checks. Medicare Part A is usually free, but Part B has a monthly cost. In 2025, the Part B premium was $185. For 2026, it is expected to rise by 11.6%, reaching about $206.50.
For example, a retiree with an average benefit of $2,008 per month will see these changes:
- After the 2.8% COLA, the benefit rises to approximately $2,064.
- Subtracting the new Medicare Part B premium of $206.50 leaves around $1,858 as take-home money.
This shows that even though the benefit increase is about $56, much of it is used to cover higher premiums, leaving only about $35 extra per month.
What This Means for Seniors
The 2026 COLA provides a small boost, but it’s important to understand how deductions work. Medicare premiums and other automatic withholdings reduce the net gain, meaning seniors may not feel the full impact of the headline increase.
Planning budgets carefully and being aware of rising healthcare costs is key to maintaining financial stability.
The annual COLA helps protect seniors against the effects of inflation, but in 2026, the 2.8% increase will be partially offset by a higher Medicare Part B premium. While Social Security payments rise, the actual extra money seniors receive is much smaller.
Knowing the difference between gross and net benefits helps retirees plan better, manage expenses, and maintain their quality of life.
FAQs
COLA is an annual increase in Social Security benefits to keep up with inflation. It is applied every January after the SSA calculates price changes.
Deductions like higher Medicare Part B premiums and other automatic withholdings reduce the increase, so the net gain is often smaller than the COLA percentage.
For 2026, the COLA is 2.8%. The exact increase depends on your current benefit, but most retirees will see about $56 more before deductions, and around $35 extra after deductions.