On the morning of Friday, October 24th, tens of millions of Social Security beneficiaries finally received the long awaited announcement of the COLA increase. The COLA, or Cost of Living Adjustment, is an increase implemented to benefits annually relative to year over year inflation. For 2025, beneficiaries across the country received a modest 2.5% increase to their benefits and as per the Friday announcement from the Social Security Administration (SSA), January 2026 will bring with it a 2.8% increase to all benefits.
The build up to this year’s COLA announcement had been slightly more anxiety-inducing than previous years due to the current ongoing federal government shutdown. The 2026 COLA increase was previously scheduled to be announced on October 15th, however, as a result of the shutdown, the release of the September CPI which is required for the COLA calculation had been delayed. This is because the Bureau of Labor Statistics (BLS) had furloughed most of its staff and all operations had ceased.
Since the data for the September CPI had already been collected prior to the shutdown, BLS then announced that it would make a special concession to release the September CPI so that the SSA could determine and announce the 2026 COLA — and this occurred on Friday morning.
A 2.8% benefit increase translates to around $56 more on average, however, this may not be the amount most retirees will see reflected in their benefit checks starting in January. Here is what you need to know.
SSA announces 2.8% COLA increase for 2026
There are currently around 75 million recipients in the Social Security program, all of whom will receive the 2.8% increase to their benefits starting in January 2026. The reason the COLA announcement is made in October despite the increase only going into effect at the beginning of the next year is simple: the COLA is calculated using inflation data for the third quarter (July, August, and September) of the year. As such, the SSA announces the increase as soon as the data becomes available. This affords retirees living on fixed incomes a bit of extra time to plan out their annual budgets with the full knowledge of how much they will be receiving in benefits.
Since the COLA is a percentage increase, the actual dollar figure increase will differ from recipient to recipient. As such, the SSA will also be mailing out personalized notices outlining the increase as of early December. Alternatively, beneficiaries can view their increase online through their my Social Security account.
Medicare premiums projected to eat away at COLA bump
Retirees aged 65 and older will often enroll in Medicare as well (Medicare eligibility only begins at age 65). The Medicare Part A premium, which covers hospital care, is typically free, however, the Part B premium, which covers outpatient care, does have a cost attached to it. Currently, the cost of the Part B premium sets retirees back by $185, and this is automatically deducted from the Social Security benefit check.
According to the Medicare annual report, the Part B premium is projected to increase by 11.6% in 2026. This would then bring the cost of the premium up to around $206.50, which would then effectively eat away at a portion of the COLA increase. This is due to the fact that Part B premiums are automatically deducted from benefits.
If the premium cost does indeed increase in 2026, instead of receiving a $54 COLA, retirees will only see an additional $34.50 reflected in their benefit checks once the Medicare Part B premium cost is deducted. The increase has not yet been officially confirmed at 11.6%, however, it is more than likely that the cost of the premium will increase in the new year.
Medicare enrolment is currently open and will remain so until December 7th. Depending on your financial situation, it may be worthwhile to weigh all of your options and change your enrolment plan if feasible. The Part D or Medicare Advantage Plan could be less expensive depending on your situation.