Social Security recipients got some decent news at the end of October. The Social Security Administration announced that in 2026, benefits are getting a 2.8% cost-of-living adjustment, or COLA.
It’s actually good news for a couple of reasons. First, a 2.8% COLA beats the 2.5% raise seniors on Social Security got at the start of 2025.
Also, a 2.8% COLA means inflation hasn’t been too rampant in recent months. Social Security COLAs are tied to inflation directly, so large raises aren’t always positive news, as they’re generally indicative of rising costs. A 2.8% COLA doesn’t sound alarms as far as inflation goes.
Meanwhile, the average Social Security benefit today is $2,015. Once 2026’s COLA goes into effect, the average benefit is expected to rise to $2,071.
That might seem like a nice boost. But before you start counting that extra money, realize that you may not get it all.
Will Medicare premium hikes trip you up?
If you’re on Social Security, you’re entitled to a COLA in 2026. This holds true whether you’re getting benefits based on your own work record or you’re collecting spousal benefits.
However, if you’re enrolled in Medicare, you’re probably aware that your Part B premiums are paid directly out of your Social Security benefits. And any increase in Part B for 2026 is going to chip away at your upcoming COLA, leaving you with less of a raise.
Of course, this isn’t new to 2026. Any time there’s an increase in the cost of Part B, it can erode your Social Security COLA. There’s really no getting around that.
Now you could argue that any cost increase you face in the new year will eat into your COLA. But because Medicare Part B premiums are paid directly out of Social Security, the impact there is more obvious.
What to do if your 2026 COLA won’t be enough
You may be worried that your 2026 Social Security COLA won’t go very far — whether you get to keep it in full or not. If that’s the case, there are steps you can take to improve your financial picture.
One of the most effective ways to boost your finances is to work. You’re allowed to do this while collecting Social Security.
If you haven’t reached full retirement age, you can earn up to $24,480 in 2026 without risking having any benefits withheld. If you’ll be reaching full retirement age in 2026, that threshold rises to $65,160.
You have a few options when it comes to working. You could take a part-time job with preset hours, join the gig economy, or take on contract work for a few months at a time. Any of these choices could do your finances a world of good.
Another option may be to relocate to a part of the U.S. where living costs are more moderate. Social Security will pay you the same amount of money each month regardless of where you live.
If you live in a higher-cost state, it pays to consider areas where expenses tend to be lower. Just keep in mind that there are still a few states that tax Social Security benefits.
Just because Social Security benefits are getting a 2.8% COLA in 2026 doesn’t mean all of that extra money will be yours to keep. If you won’t be getting your COLA in full and that’s a problem for your finances, take steps to improve your situation so you don’t end up struggling.
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