We are currently merely weeks away from the next Social Security Cost of Living Adjustment announcement. This announcement will inform seniors the exact figure by which their benefits will be increased in the new year. The Cost of Living Adjustment, or COLA, is implemented to benefit amounts once a year in order to help the benefit check to retain its buying power in the face of inflation.
For 2025, the COLA came it at a modest 2.5% and all benefits were adjusted accordingly in January. Experts have shared early projections for the next COLA using the inflation data available to date and it does seem more than likely that the 2026 COLA will come in slightly higher than that of 2025. The unfortunate news, however, is that even this moderately higher COLA is still likely to fall short in its attempts to adequately counter the effects of inflation.
The plot appears to be worsening for seniors living on a fixed income because Medicare premiums are also projected to increase in the new year. For many seniors, this could mean that their COLA bump will be lost to increasing costs before it even reaches their bank accounts. Here is everything you need to know.
Is the Social Security COLA falling short?
The COLA is determined by measuring the CPI-W of the third quarter of the current year against the third quarter CPI-W of the previous year. If there is an increase from the previous to current year, this becomes the next COLA. If there is a decrease from the previous year to the current year, the COLA will simply default to 0% which means that your benefits will never be cut even if inflation declines.
The CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) is a subset of the CPI that measures the cost of an average basket of goods and services purchased by the urban working population. As such, advocates have been calling for the COLA to be determined using a different measure of inflation that focuses more on the types of costs associated with the lifestyle of seniors. A recent study conducted by The Senior Citizen’s League (TSCL) revealed that most seniors feel frustrated with their benefits because inflation seems to be growing much faster than their benefits do.
The Medicare Board of Trustees has also estimated that “the standard monthly Part B premium would rise $21.50 to $206.50 from $185.00.” According to estimates from experts, the 2026 COLA is projected to be somewhere between 2.7% and 2.8%. Relative to the average benefit check, this means that seniors will see a little over $50 more in their benefits in the new year. However, since Medicare Part B premiums are automatically deducted from benefit checks, some seniors may not even see the full 2.7-2.8% increase.
According to Mary Johnson, independent analyst and Social Security expert, “a jump of $21.50 would be very close to setting the record for the highest premium jump in terms of dollars, in program history, which was $21.60 per month set in 2022.”
“Additionally, Part D prescription drug plan premiums could jump. A new demonstration program that slowed the premium growth of free standing drug plans in 2025 will be less generous in 2026,” according to nonprofit healthcare researcher KFF.
Potential uptick in elder poverty?
An August 9th report from The Census Bureau revealed that, “poverty among adults at least 65 years old rose in 2024 from the prior year. It was the only age group that saw an increase. Based on the most comprehensive measure of poverty, the poverty rate rose from 14.2% to 15%, the highest level among all age groups.”
Subsequently, regarding these statistics, Claire Casey, president of the AARP Foundation stated the following: “The Census report just made it clear: low-income seniors are falling behind. People over 65 were the only age group to have their poverty rates increase, with nearly a million more seniors falling into poverty in 2024. More work needs to be done so everyone can age with dignity and security.”