For the near 75 million Americans depending on Social Security benefits to survive, the SSA’s annual Cost of Living Adjustment serves as an important announcement to start planning their monthly budgets.
Many Social Security recipients live on these benefits alone — and it’s a fixed income.
This means that as the cost of living goes up, beneficiaries are ultimately left at the mercy of COLA increases to help them stay afloat.
Recently, the Social Security Administration confirmed a 2.8% cost‑of‑living adjustment for 2026 — a rate higher than analysts previously predicted.
For 2026, there’s a bit of good news: that lifeline is getting a small raise.
But there’s also a twist — rising health‑care costs could swallow much of it.
A raise, but with limited impact
Starting in January 2026, beneficiaries will see their benefits rise by 2.8%.
That means the average monthly benefit — previously about $2,015 — will rise to roughly $2,071 for retired workers.
But many retirees and bipartisan groups like the Senior Citizens League, argue the $56 a month increase is simply not enough to help SSA beneficiaries adapt to inflation.
“The 2026 COLA is going to hurt for seniors,” TSCL Executive Director Shannon Benton said of the increase.
“Year after year, they warn that Social Security’s meager increases won’t be enough, and the Census Bureau estimates that about 10 percent of retirement-age Americans live in poverty.“
Benton said the League’s research actually suggests that the number may be higher.
Healthcare costs will offset the 2026 increase
While Social Security checks are increasing, so are healthcare costs — including the standard monthly premium for Medicare — a widely used health insurance for people 65 or older.
In 2026, the standard premium for Medicare Part B will rise from $185 per month to $202.90 — nearly $18.
But the Part B deductible, which is what you pay before benefits kick in, will also increase by $26.
Medicare premiums are typically deducted automatically from Social Security checks, which means the majority of the extra money from COLA will be largely offset by increased health‑care costs.
The Medicare increases in 2026 represent a near 10% jump — one of the largest single-year dollar increases in the program’s history, according to CNN.
In fact, experts suggest that the bump many expect in their “take‑home” after deductions could be much smaller — or even zero, depending on income and circumstances.
According to Investopedia, what looked like a ”monthly boost,” in COLA will shrink to about $39 after accounting for changes in the standard monthly premium.
Can anything be done?
The Social Security COLA is determined by inflation and wage growth, measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. The theory is that as everyday prices rise for groceries, utilities, and gas, Social Security benefits should — ideally — move up enough to keep pace, helping retirees and vulnerable Americans avoid falling behind.
But advocates argue this method is flawed, suggesting a different index that tailors more towards beneficiaries and their expenses may make more sense.
“One straightforward option for reforming Social Security COLAs would be calculating them with the Consumer Price Index for the Elderly (CPI-E) instead of the Consumer Price Index for Urban Wage Earners (CPI-W), which is the government’s current measure for calculating COLAs,” Benton said.
“The CPI-E is specifically designed to represent older Americans’ spending habits. As a recent TSCL analysis shows, it tends to come in higher than the CPI-W about 69 percent of the time, resulting in thousands of dollars in lost benefits for seniors.”