Your 2026 Social Security Cost of Living Adjustment Won’t Be as Big as You Think

In 2026, Social Security checks are getting bigger. That’s the good news. The bad news, however, is that retirees are likely to find that the Cost of Living Adjustment (COLA) they are expecting doesn’t quite provide them with the extra buying power they were planning on. 

Since it’s best to understand the reality of the COLA sooner rather than later, here’s what seniors need to know about why their Social Security raise in 2026 is going to end up being disappointingly small. 

Don’t count on getting a big Social Security Cost of Living Adjustment

The Social Security Administration announced the 2026 Cost of Living Adjustment on October 24, 2025 and the raise seemed like it was going to be a decent one next year. While retirees in 2025 got a 2.5% COLA, the 2026 raise is higher at 2.8%. But, while that sounds good on the surface, the raise is likely to do less for seniors than the 2025 increase did, and many retirees won’t see their checks go up by anywhere near the full 2.8%. 

Instead, a good portion of the benefits bump — around 1/3 — is going to be taken out of retirees’ checks before their direct deposit is made or their payment is sent. This money is going to go directly to Medicare to cover rising premiums as Medicare costs are soaring in 2026. 

Based on recent announcements, the premium cost of Medicare Part B is rising by $17.90 per month. Premiums for those who pay the standard amount will jump from $185 to $202.90, which is a 9.7% increase. That is much larger than the benefits increase that happened in 2025. Between 2024 and 2025, premiums increased by just $10.30, up from $174.70. 

This means that, while the 2025 COLA was just 2.5% compared to next year’s 2.8% increase, retirees who are on Medicare actually ended up seeing a bigger increase in their benefit with the smaller COLA. A senior with a $2,000 benefit would have received a $50 raise in 2025. After subtracting $10.30 for the Medicare premium increase, they would have seen their monthly payment rise by $39.70. But, this year, a senior collecting $2,000 who gets a 2.8% COLA would see a $56 benefits increase reduced by $17.90. Their check will be going up by only $38.10. 

Other factors can also affect how much the COLA impacts retirees

Rising Medicare premiums are going to take the biggest bite out of the 2026 COLA, but there are also other factors to think about as well. Specifically, while there are many automatic changes built into the benefits program — such as the COLA and an increase in the work limits establishing how much you can earn without benefits being affected — there is one rule that doesn’t change over time due to inflation. That rule relates to when Social Security benefits become partly taxable. 

If you are a single tax filer, your benefits will start being taxed once your provisional income hits $25,000. Provisional income is half of all Social Security income, some non-taxable income, and all taxable income. Married joint filers also start being taxed on a portion of their benefits once their provisional income hits $32,000. These thresholds aren’t indexed to inflation, so more retirees each year end up hitting the income threshold where benefits become partly taxable.

In 2026, many retirees will end up with at least a little more monthly income because of the COLA, even after accounting for the Medicare premium increase. If your income goes up enough because of the COLA that you find yourself subject to tax on benefits when that wasn’t an issue before, then you’ll take another hit that reduces how much “extra’ money the raise provides. 

The reality is, Social Security COLAs can help seniors, but these raises don’t ensure that retirees don’t lose ground. Seniors need to know that their benefit increases may not provide the boost they are expecting and must plan accordingly.

It’s also worth exploring other sources of guaranteed income that offer protection against inflation as well, which some annuities do.  The more sources of stable income retirees have, the more secure they’ll be in their later years — even if Social Security raises turn out to be a disappointment.