Inflation hikes spare no one and for those living on a fixed income such as Social Security, the repercussions can become especially dire. As such, in order to help all benefit checks retain its buying power in the face of rising costs, benefit amounts are increased on an annual basis proportionate to year over year inflation. This is called the Cost of Living Adjustment, but is generally referred to as the COLA. With the ending of September, all of the CPI data required for the COLA calculation should soon be available as the COLA is determined using data from a subset of the CPI for the third quarter of the year.
The 2025 COLA brought up all benefit amounts by a modest 2.5% starting in January, and based on the data available to date, Social Security experts such as The Senior Citizen’s League and independent analyst Mary Johnson, have shared projections for the 2026 COLA of 2.7% and 2.8% respectively. Based on the estimations, if a 2.7% COLA is announced later this month, a retiree receiving the average benefit amount should see a $54 increase to their checks in the new year. This amount may not be the actual figure reflected in their bank accounts, however. This is because the Medicare premium is also projected to face a hefty increase in 2026. Here is everything you need to know.
2026 COLA announcement
The Bureau of Labor Statistics releases its CPI data on a monthly basis, and of this data is a specific subset of the CPI called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). By taking the CPI-W of the third quarter of the current year and measuring it against the CPI-W of third quarter of the previous year, the COLA is calculated. If there is an increase, this becomes the next COLA, and if there is a decrease or no change, the COLA will just default to 0%. This means that your benefit check will always be increased due to inflation, but never decreased as a result of deflation.
Data for two of the three relevant months (July, and August) have already been released by the Bureau of Labor Statistics. The agency generally releases the previous month’s data about two weeks into the new month once it has completing processing it. As of October 1st, however, the U.S federal government has been shut down following a stalemate regarding the healthcare spending bill. As a result, the Department of Labor which oversees the Bureau of Labor Statistics has ceased all operations.
While benefits will still be paid to beneficiaries uninterrupted, the COLA announcement is likely to be delayed this year due to the current furlough and suspension of activity at the Bureau of Labor Statistics. There still remains 90 days before the next COLA needs to be implemented and as such, it is not likely that there will be any delays regarding the actual increase.
Medicare premium hike
According to the Medicare Board of Trustees report, the Medicare Part B premium is projected to increase by a whopping 11.6% in the new year. For the current year, the Part B premium comes in at $185 each month, however, with the projected premium hike, enrollees will be looking at a Part B premium of around $206.50 in 2026.
What makes matters worse is the fact that the Medicare Part B premium is automatically deducted from Social Security benefit checks, which spells bad news for the impact hoped to be achieved through the COLA increase. If Medicare Part B premiums increase to $206.50 in the new year, and the COLA comes in at the projected 2.7% which translates to around $54 on average, when the Part B premium expense hike and the COLA increase offset each other, retirees will only be looking at an additional $33 or so in their benefit checks for 2026. This effectively reduces the value of the $54 COLA by almost $22.