Social Security beneficiaries will see their monthly payments increase 2.8% beginning in January 2026. For a retiree receiving the average benefit amount, that equals $56 more per month.
“They won’t even notice it,” says Jim Komoroski, a registered Social Security analyst and principal with The M1 Agency in Bloomfield Hills, Michigan.
He notes that an upcoming Medicare Part B premium increase alone will take a large portion of the average Social Security cost-of-living adjustment, known as the COLA.
While older Americans are likely to welcome any increase to their Social Security benefits, advisors such as Komoroski say it won’t go far. In fact, the 2026 Social Security COLA isn’t likely to cover inflationary expenses as Americans head into the new year.
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Health Care Costs Will Absorb Much of Social Security COLA
The Social Security COLA is based on the consumer price index for urban wage earners and clerical workers. Known as the CPI-W, it measures the cost of goods and services typically used by these workers, who the Bureau of Labor Statistics says make up about 30% of the population.
“The COLA for Social Security is laughably misaligned with the expenses seniors have,” says Aaron Brachman, executive managing director with the Washington Wealth Group at Steward Partners in Washington, D.C. “Health care is such a large expense for seniors.” And it’s one he says isn’t accurately reflected in the current COLA calculation.
In 2026, Medicare Part B premiums will increase from $185 to $202.90 per month, an increase of $17.90. Meanwhile, early retirees may see their insurance premiums increase even more.
Social Security can be claimed as early as age 62, but Medicare eligibility starts for most people at age 65. In the years in between, those who aren’t working need to purchase their own health care coverage. Those who purchase plans on the government’s Health Insurance Marketplace can expect average premium increases of 26%, according to the nonprofit KFF. If someone currently receives an enhanced subsidy to help pay their premiums, their costs could increase an average of 114% since those subsidies are set to expire at the end of 2025.
“Most of the insurance companies have bigger deductibles and co-pays now,” says Steve Azoury, chartered financial consultant and owner of Azoury Financial in Troy, Michigan.
For Medicare Part A, the deductible for the first 60 days of inpatient hospital care is rising $60 in 2026, from $1,676 to $1,736. The deductible for Medicare Part B, which pays for outpatient care, will rise $26 from $257 to $283.
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Living Expenses Are Also Expected to Rise
Beyond rising health care costs, seniors will have to contend with increases in other living expenses.
The Bureau of Labor Statistics found the annual rate of inflation in September 2025 was 3%, an amount that already exceeds the 2026 Social Security COLA. Government officials say official October inflation numbers may not be released because of the federal shutdown during that month. However, the Federal Reserve Bank of Cleveland does its own inflation forecast and expects it to remain near 3% through November at least.
Actual expenses can depend on multiple factors, though. For instance, winter heating costs are influenced by the temperature. If this winter is 10% warmer than last winter, Midwest seniors may save 1% on their annual heating expense if they use natural gas. But if it’s 10% colder, their costs will increase 7%. That’s according to data from the U.S. Energy Information Administration.
“When you start to weigh all that in, it’s gone,” Komoroski says of the Social Security COLA.
Rather than relying on the COLA alone to cover rising costs, seniors may want to consider how their investments are faring. Azoury says many people become too conservative as they age. With the possibility of a 30-year retirement on the horizon, they need to be sure that their money will grow by at least the rate of inflation.
“I’m not talking going wild and crazy,” Azoury says. “A little bit of risk can make a substantial change in gains.”
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Limited Options for Older Americans
Seniors who feel their budget squeezed next year may have limited options available for financial relief. Those who are able to work may want to consider a part-time job or side gig for extra cash. Otherwise, the best advice may be to begin looking for places to cut expenses.
Your Medicare plan is an ideal place to start, according to Komoroski. With open enrollment going on, older Americans have until Dec. 7 to change their Medicare coverage. People should pay particular attention to whether their prescriptions will continue to be covered and the co-pay amount, since these plan details often change annually.
“That’s the fastest way, I feel, for seniors to save some money,” Komoroski says. He suggests looking outside Medicare for savings as well. For instance, paying out of pocket using a discount card such as GoodRx can sometimes be cheaper than a Medicare co-pay. Or using a mail-order pharmacy such as Amazon may result in savings.
Retirees may need to dip further into their retirement funds to cover any gaps in their budget next year, but Brachman advises caution. Increasing taxable income too much could result in more Medicare costs. “You can get bumped up pretty quickly to higher premiums,” he says.
In 2026, income-related monthly adjustment amounts, known as IRMAAs, will be assessed on monthly Medicare premiums for individuals with modified adjusted gross incomes starting at $109,000 and for couples with incomes of at least $218,000. These adjustments can add anywhere from $81.20 to $487 to monthly Part B premiums.
Social Security beneficiaries should consider working with a financial professional to avoid these types of pitfalls. A good advisor can also provide guidance on appropriate investments and help pinpoint cost-cutting strategies for seniors.
“People should get a good advisor,” Azoury says. “You’d be surprised how many people continually do bad things (with their money).”
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Will the 2026 Social Security COLA be Enough to Cover Seniors’ Rising Costs? originally appeared on usnews.com
