Social Security COLA for 2026: A 2.8% Increase and Widespread Concerns and how Medicare costs could impact benefits

Social Security COLA for 2026: A 2.8% Increase and Widespread Concerns

The Social Security Administration (SSA) has announced a 2.8% Cost-of-Living Adjustment (COLA) for 2026. This increase, which will automatically boost monthly payments for approximately 71 million beneficiaries, is slightly higher than the 2.5% adjustment set the previous year, reflecting a continued rise in U.S. inflation (which hit an annual rate of 3% in September).

The COLA is designed to prevent seniors and disabled Americans from losing purchasing power. Starting in January 2026, the 2.8% increase is expected to raise the average monthly Social Security payment by about $56, bringing the average benefit to $2,071.

The Gap Between Adjustment and Need

While the SSA commissioner noted that the COLA helps benefits reflect current economic realities, many advocates and beneficiaries argue the increase is not enough.

• AARP Polling: A survey by AARP, an advocacy group for older Americans, found that many seniors believe the adjustment falls short, suggesting they would need a COLA closer to 5% to truly keep pace with their daily expenses.

• Rising Poverty: The struggles are compounded by increasing poverty among seniors, which rose to 15% last year, highlighting the difficulty many older adults face in managing rising costs for essentials like housing and utilities.

Calculation Method and Medicare's Impact

A major point of contention lies in the method used to calculate the annual adjustment.

Calculation Method Criticism The SSA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine the COLA. Critics argue that this metric is flawed because it tracks the expenses of younger working adults, which don't accurately reflect the financial realities of retirees. Specifically, seniors face disproportionately higher costs for health care and housing.

Medicare Costs Will Absorb the COLA The increase is also expected to be significantly—or entirely—offset by rising healthcare premiums. Advocates warn that most of the 2026 COLA will be eaten up by higher Medicare costs.

While official figures are pending, projections suggest the standard Medicare Part B monthly premium (which is deducted directly from Social Security checks) could rise by 12% to $206.50 in 2026. The National Council on Aging (NCA) stated that the COLA is "woefully insufficient" given the soaring costs of medical, housing, and groceries, which are all rising at a pace that exceeds the 2.8% benefit boost.

Source: CBS News