Social Security beneficiaries are a vulnerable cohort of individuals who are often reliant on their monthly benefits as a primary source of income through which they are able to cover their living expenses. Since this is a fixed income, however, even the smallest rise in costs of living could deeply impact these households. Subsequently, in pursuit of retaining the buying power of the monthly benefit in the face of inflation, a Cost of Living Adjustment (or COLA) is done annually.
Inflation cannot be avoided regardless of income bracket, however, its effects are felt much more by those living on fixed incomes such as Social Security beneficiaries. It is for this reason that benefit amounts are adjusted annually to account for inflation. The actual percentage by which the benefit is adjusted varies from year to year in relation to the rate of inflation year over year.
For 2025, the COLA came in at 2.5% and as result, all beneficiaries received a 2.5% increase to their benefit amounts as of January. Estimates for the 2026 COLA have been ranging from 2.6% to 2.7% so far. Here is what you need to know.
Social Security COLA 2026
The third quarter data of the consumer price index for urban wage earners and clerical workers (CPI-W) of the current year is compared to the third quarter CPI-W data of the previous year and the difference in these figures becomes the COLA for the upcoming year. The COLA for the upcoming year is announced in October.
Last month, The Senior Citizens League (TSCL) predicted the 2026 COLA to be 2.5%, the same as this year, however, based on June’s inflation data, the TSCL has now estimated the COLA for 2026 to be 2.6%. According to the nonpartisan group, “the TSCL model’s prediction has increased for five consecutive months amid mounting inflationary pressures.”
Independent Social Security and Medicare policy analyst Mary Johnson, on the other hand, has estimated that the 2026 COLA will come in at 2.7%. Whilst a higher COLA means a bigger bump to the benefit, it is something of a double-edged sword in the sense that a higher rate of inflation means that things are now costing more. Additionally, experts are also warning that the 2.6% – 2.7% increase may get lost in the mix of rising Medicare premiums and other actual costs.
“It’s not uncommon for Part B premiums to consume much or even all of the annual COLA, leaving little extra to cover other big cost increases,” Johnson wrote on Tuesday.
Medicare costs
Generally speaking, Medicare Part B premiums are automatically deducted from the Social Security benefit amount. This has become a cause for concern due to the rising costs of this premium — which is expected to increase again in 2026. “The standard Part B premium is expected to increase from $185 to $206.50 in 2026. That’s an 11.6% jump; it would be the largest year-over-year increase since 2022,” as per the 2025 Medicare Trustees Report.
Furthermore, with the new One Big Beautiful Bill Act (OBBBA) coming into play, lower income beneficiaries may become even more vulnerable, specifically those who might lose Medicare coverage all together under the new legislation. Whilst claims are being made that the OBBBA has eliminated taxes on benefits for most as a result of the additional tax deduction for seniors aged 65 and older with an income below $75,000, not everyone will gain relief from this.
According to the TSCL, only around half of seniors pay taxes on benefits, meaning that low income retirees are not likely to see any sort of relief from this additional tax break. TSCL data shows that, “13% of retirees live on less than $1,000 per month and that 39% rely on Social Security for their entire income.” As such, even the slightest of increases in costs such as rent or premiums could cause severe financial strain on these individuals.
“TSCL’s research shows that 93 percent of American seniors see Social Security and Medicare reform as a high priority for Congress and the President. They’re calling on the administration to calculate COLAs with an index more representative of seniors’ experiences and provide a one-time catchup payment to make up for historic COLA shortfalls,” Executive Director of TSCL Shannon Benton stated in a recent press briefing.