Social Security’s COLA Is 2.8% — but Your Benefits May Go Up by a Lot Less

Millions of older Americans today rely on Social Security for retirement income. For many, those benefits are a primary source of income. For this reason, it’s a good thing that Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA.

The purpose of Social Security COLAs is to help ensure that benefits are able to keep up with inflation.

Imagine you begin collecting Social Security at age 62, which is the earliest age to file, and you live until age 92. The cost of everyday items is extremely like to rise over 30 years. In fact, it’s very likely to rise over even three or four years.

Without Social Security COLAs, beneficiaries would be almost guaranteed to lose out on buying power over time. For this reason, lawmakers decided decades ago that Social Security COLAs would be automatic and pegged to an index called the CPI-W, or Consumer Price Index for Urban Wage Earners and Clerical Workers.

Of course, this doesn’t mean that Social Security benefits actually get a COLA every year. If there’s no change in the CPI-W from one year to another year, or if there’s a decrease, Social Security benefits do not go up (thankfully, they also don’t go down). But when there is an increase in the CPI-W, benefits are eligible for a boost without lawmakers having to meet and vote one in.

Based on changes to the CPI-W between the third quarter of 2024 and the third quarter of 2025, Social Security benefits are eligible for a 2.8% COLA in 2026. That’s a slightly larger raise than the 2.5% COLA beneficiaries received at the start of 2025.

But before you get excited about that 2.8% COLA, you should know that your benefits may increase by less. Here’s why.

Will a Medicare premium hike eat into your COLA?

The earliest age to claim Social Security is 62, and Medicare eligibility typically begins at age 65. As such, not everyone on Social Security is enrolled in Medicare.

However, if you are a Medicare enrollee collecting Social Security, you should know that you may not get to keep your 2.8% COLA in full.

People who are enrolled in Social Security and Medicare at the same time have the premium payments for their Part B coverage deducted from their monthly benefits. So if you’re on Medicare, any increase in the cost of Part B in 2026 is going to chip away at your COLA.

Thankfully, seniors are protected from seeing their Social Security benefits decrease year to year when Medicare Part B hikes outpace COLAs. This is unlikely to be the case in 2026, though.

Social Security benefits are getting a generous enough COLA in the new year to surpass even a large Part B premium hike. At the same time, though, you shouldn’t expect your entire 2.8% raise if you’re enrolled in Medicare and have to pay for Part B.

It’s important to plan ahead

At this stage of the year, you may be focused on doing some financial planning for 2026. If you’re on Social Security, it’s important to understand why your benefits may not increase as much as you expect them to. The sooner you realize that, the sooner you can take other steps to improve your financial picture.