Some retirees may not get the full 2026 Social Security boost—here’s why

After a nine-day delay caused by the federal government shutdown, the Social Security Administration finally delivered the news millions of Americans were waiting for. The 2026 cost-of-living adjustment (COLA) will be 2.8%, announced on October 24, 2025, bringing an average increase of about $54 to $56 per month for retired workers.

But before you start planning how to spend that extra money, there's something you need to know. For many Social Security recipients, a significant portion of that increase is about to disappear before it even reaches their bank account.

The Medicare premium surprise that nobody's talking about

Here's the reality check that's coming: Medicare Part B premiums are projected to jump to $206.50 per month in 2026, up from the current $185—a 12% increase according to Medicare's trustees report. Since Medicare premiums are automatically deducted from Social Security checks, this $21.50 monthly increase will eat directly into your COLA benefit.

For the average beneficiary, the higher projected Medicare premium would consume nearly half the bump in Social Security benefits. Instead of enjoying a $56 monthly increase, you might see only about $34.50 in actual additional spending money.

For some seniors, the premium increase could consume their entire COLA. That means no real increase in purchasing power at all, despite the official 2.8% adjustment.

A government shutdown delay adds insult to injury

The COLA announcement was originally scheduled for October 15 but was delayed nine days due to the federal government shutdown. While Social Security Administration employees were eventually recalled to process the critical inflation data needed for the calculation, the delay left millions of seniors in limbo during their annual planning period.

The timing couldn't have been worse for people who depend on this information to make important financial decisions about everything from holiday spending to medical care.

The historical perspective that puts this in context

While a 2.8% increase might sound reasonable, from a historical standpoint, this COLA ranks 29th out of the 51 COLAs announced since the government tied adjustments to the Consumer Price Index in 1975. In other words, it's decidedly average and that's precisely the problem for seniors facing above-average healthcare cost increases.

The COLA has averaged about 2.6% over the past 20 years, but medical and elderly care costs are surpassing the 3% annualized pace of general inflation, with costs for caring for the elderly at home jumping 11.6% annually, while medical services rose 3.9%.

Also read: What to know about Social Security’s unusual payment schedule in 2025

What seniors are really saying about COLAs

The frustration among older Americans is palpable and backed by data. A 2025 study finds that 73% of seniors depend on Social Security for more than half their income, making every dollar of that COLA crucial for daily survival.

Yet 94% of seniors said the 2025 COLA of 2.5% was too low and would cause their monthly checks to fall behind inflation. With the 2026 increase being only slightly higher at 2.8%, expect similar dissatisfaction.

Only 10% of seniors are happy with the amount they receive from their monthly Social Security checks, with many citing COLAs that lag inflation as a problem.

The calculation controversy seniors want fixed

There's a growing movement among senior advocates for reforming how COLAs are calculated. One straightforward option would be calculating COLAs with the Consumer Price Index for the Elderly (CPI-E) instead of the current Consumer Price Index for Urban Wage Earners (CPI-W), as the CPI-E is specifically designed to represent older Americans' spending habits.

Analysis shows the CPI-E tends to come in higher than the CPI-W about 69% of the time, resulting in thousands of dollars in lost benefits for seniors over time.

As AARP's Joel Eskovitz explains, "The CPI for working Americans doesn't quite capture what the spending patterns are for older Americans. It's close, but there are just different things that working Americans spend on than retired Americans."

Also read: You could qualify for $1,000s in medical debt relief—see if yours will be cleared automatically

What this means for your 2026 budget

Don't start celebrating that COLA increase just yet. Here's your action plan:

1. Wait for Medicare announcements

Medicare typically announces its premium and deductible changes for the following year in the fall. Before making any budget adjustments based on your COLA, wait to see the official Medicare Part B premium announcement.

2. Review your Medicare coverage during open enrollment

Medicare's open enrollment period runs through December 7, giving you a chance to potentially reduce your overall Medicare costs. Shopping for a less expensive Part D prescription drug plan or Medicare Advantage plan could help offset premium increases elsewhere.

3. Consider additional income sources

With current inflation at 3%, and inflation expected to remain elevated next year, the 2.8% COLA may help seniors mostly keep up, but barely. Consider part-time work, downsizing, or other strategies to boost your financial cushion.

The bigger picture: A call for reform

The disconnect between Social Security COLAs and seniors' actual cost increases highlights a systemic problem that goes beyond any single year's adjustment. When asked to pick just one area of Social Security to prioritize, the top choice among seniors was better COLAs (34%), followed by improving Social Security's long-term finances (33%).

Social Security's trustees project that the trust funds will run short by 2034 and the program will be able to pay only 81% of scheduled benefits unless Congress acts to stabilize the system's finances. But even before that cliff arrives, millions of seniors are already falling behind due to inadequate cost-of-living adjustments.

Read next:

• Big changes are coming to Social Security work rules in 2026—could they affect your benefits?
• Could your SNAP benefits be delayed this fall? Here’s what’s happening
• Why you won’t see a Social Security SSI payment in November—here’s what to know

Key Takeaways

• Social Security recipients will receive a 2.8% cost-of-living increase in 2026, which equates to about $56 more per month on average.
• However, those enrolled in Medicare may not see the full benefit of this increase, as the standard Medicare Part B premium is projected to rise to $206.50 a month in 2026, reducing the net effect of the COLA.
• Seniors on both Social Security and Medicare are likely to see their monthly benefits rise by only about $34.50, due to the higher Part B premiums eating into their increase.
• It's important for retirees to be realistic about how the COLA will impact their finances and to consider reviewing their Medicare and budget options, especially during open enrollment, to maximize their benefits.

What's your experience with Social Security COLAs and Medicare premium increases? Have you found ways to stretch your benefits further, or are you struggling to keep up with rising costs? Share your strategies and concerns in the comments below—your fellow readers might benefit from your insights.