The Social Security program exists to provide vulnerable people across the country with financial support during their retirement. While it is a given for most working individuals that they be able to rely on Social Security to some capacity during their retirement, benefit checks may not always stretch as far as you need them to.
The amount you will receive in benefits is determined in relation to your lifetime earnings. This means that when Social Security Administration (SSA) calculates your benefits, the higher your Social Security payroll tax contributions, the higher your benefits. Individuals who earn an income that is equivalent to or higher than the wage cap for each respective year will likely become eligible for the maximum benefit or close to it. In 2025, the maximum benefit for a retiree claiming at full retirement age is $4,018, while the average benefit check totals to around $2,008, which is basically half the maximum.
Both of these figures will be increased by 2.8% in 2026 once the COLA increase comes into effect, however, other expenses held by seniors are also projected to increase in the new year. The Medicare Part B premium is projected to face a staggering 11.6% increase in 2026. This premium hike directly impacts Social Security beneficiaries as the Part B is automatically deducted from benefit checks.
The good news is that we have not yet reached 2026, which means that, if need be, there is still time to reassess your finances and make any changes to premiums or general budgets before the cost hikes come into play. Here is what you need to know.
Medicare premium hike
Medicare is a federal health insurance program, with coverage usually kicking in for seniors aged 65 and older. Coverage is, however, also possible for younger individuals who are diagnosed with certain conditions. Medicare coverage is broken up into the following parts:
- Part A — hospital insurance
- Part B — medical insurance
- Part C — Medicare advantage
- Part D — prescription drug coverage
Currently, the Medicare Part B premium sets seniors back by $185. As such, a premium increase of 11.6% would bring the total cost of the Part B premium up to around $206.50. This is an additional $21.50 dollars that will be automatically deducted from the Social Security benefit check in 2026. If you are a beneficiary earning the maximum benefit check, a $21 cost hike may not have severe financial repercussions, but for those earning the average benefit (or lower), this premium hike could result in financial trouble.
“It’s the persistent high costs that [are] presenting a significant challenge,” explains Shannon Benton, Executive Director of The Senior Citizens League, a nonpartisan, nonprofit advocacy group. “That’s true especially for those who are on fixed incomes, like so many senior citizens who rely on their Social Security check for 100 percent of their income.”
December 7th deadline
Now that we know the Cost of Living Adjustment will bring seniors a 2.8% benefit increase in 2026, and that Medicare Part B premiums are also projected to face an 11.6% increase, seniors can begin planning their budgets for the new year with clarity. If you have run the numbers with the upcoming increases included and you feel that this does not align with the budget you hope to work with, there is still time to make some changes.
The annual Medicare enrolment period will be open until December 7th. If you are uncertain about how your budget will hold up under the weight of higher costs, take advantage of this time to review your enrolment. If the Part B premium cost works out to be too costly for you once the increase sets in, you could consider switching over to the Part D or Medicare Advantage plans as the overall cost is lower.