Social Security COLA Update: What to Expect
Working full-time can get pretty stressful as year-end performance reviews approach. It’s that time when managers usually disclose next year’s raise—if there is one, of course.
On a similar note, Social Security recipients often feel a wave of anxiety come October. This month typically brings news about the upcoming Cost of Living Adjustment (COLA).
The Social Security Administration (SSA) calculates these adjustments based on the year-over-year changes in the Consumer Price Index for Urban Wage and Office Workers (CPI-W) for the months of July, August, and September. As a result, the SSA waits until October each year for the new figures to be released.
Initially, the SSA was set to announce the 2026 COLA on October 15th. However, due to a government shutdown and delays in the release of September’s CPI-W data, the announcement has been postponed to October 24th.
The news has now come out: retirees will see a 2.8% increase starting in January. This translates to about an average of $56 more per month based on current averages.
But it’s worth noting that not every senior will benefit equally. The increase won’t necessarily apply to all Social Security checks.
Why Some Social Security Recipients Might Lose Out
Every retiree enrolled in Social Security stands to gain from the upcoming COLA. However, some may claim Social Security before reaching the eligibility age for Medicare.
Generally, Medicare eligibility begins at age 65, while individuals can start claiming Social Security as early as 62 with reduced benefits. It’s quite common for those over 65 to sign up for both Medicare and Social Security at the same time.
Keep in mind that while Medicare Part A is usually free, Part B, which covers outpatient services, comes with a monthly premium.
The current standard monthly premium for Part B sits at $185, but projections suggest this could rise to $206.50 in 2026—a notable $21.50 increase. If this happens, the average Social Security recipient enrolled in Medicare would only see an effective raise of about $34.50 after factoring in these increased costs.
This potential scenario could be disappointing for those who were hoping for a more substantial COLA to cushion their finances.
Although that $206.50 estimate isn’t set in stone, general expectations lean towards a significant increase in Medicare Part B costs in 2026. Thus, whatever the exact number may be, it could heavily influence the future COLAs for those on Medicare.
What to Anticipate
As the news around the Social Security COLA rolls in, it’s only natural to start doing some calculations based on the benefits you receive. However, if you’re also enrolled in Medicare, it might be wise to hold off on any budget adjustments until you can assess what changes are coming for Part B.
And remember, Part B premium isn’t the only factor in play; costs for Part D and Medicare Advantage plans might also increase.
The silver lining here is that Medicare’s open enrollment period is ongoing, allowing you the chance to adjust your coverage until December 7th. Hunting for a more affordable Part D or Medicare Advantage Plan could lessen overall Medicare expenses, thereby broadening the effect of Social Security checks.
Ultimately, it’s crucial to be realistic about how any future COLA will affect your finances, especially with Medicare in the mix. If a more significant raise is what you’re after, taking proactive steps might be the best route.
A 2.8% COLA will provide a slight bump to Social Security checks next year, even when considering potential Medicare premium increases. However, making lifestyle changes such as downsizing your work or picking up extra hours could offer a more substantial benefit to your financial situation.
