Marina
The government has announced that the annual Cost-of-Living Adjustment (COLA) for Social Security benefits will rise by 2.8% in 2026, meaning most spouses and retirement claimants will see their monthly benefit checks grow by approximately $27 on average.
Understanding the COLA Calculation
Each year, the Social Security Administration (SSA) determines the COLA to offset inflation and help seniors maintain purchasing power.
This increase is based on the changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price shifts in essentials such as food, housing, transportation and energy.
Even though a 2.8% rise might appear modest, for those on fixed incomes—especially couples relying on Social Security—it can still make a meaningful difference.
Why the Raise May Not “Feel” Like Much
Many retirees see little obvious improvement in their net benefits because much of their income is devoted to healthcare and housing—areas that frequently increase faster than overall inflation.
So while gross benefits may climb, real-world costs can erode the actual purchasing power of that increase.
Impact of Rising Healthcare Costs
For the majority of beneficiaries, premiums for Medicare Part B are automatically deducted from Social Security checks.
If your benefit grows by, say, $50 but your Medicare deduction goes up by $20, then your actual take-home rises by only $30. So, it’s essential to review your net benefit after all deductions.
How to Review Your New Benefit Amount
You do not need to wait for a mailed statement. You can log into your online Social Security account to view:
- Your gross benefit amount before deductions
- The deducted Medicare premium or other withholdings
- Your actual net monthly payment
Regularly checking these figures helps you stay informed about how much you really receive.
Smart Ways to Make the Most of Your COLA
Even incremental increases can add up if handled thoughtfully. Consider these practical steps:
- Review your Medicare plan annually to eliminate any unnecessary charges.
- Re-evaluate your household budget to identify expenses you can reduce or eliminate.
- Track your monthly spending carefully to stay on top of cost trends.
- Delay non-urgent withdrawals from other retirement or investment accounts to minimize additional fees or taxes.
Why Some Experts Believe the COLA Formula Needs Updating
Critics argue that the CPI-W used for the COLA doesn’t accurately reflect the retirement population’s spending habits. Seniors tend to spend more on healthcare, housing and long-term care—not fully captured by the CPI-W.
The alternative index, the Consumer Price Index for the Elderly (CPI-E), focuses specifically on older adults and might produce a higher annual adjustment that better matches their real-world cost increases.
While the 2.8% increase for 2026 is certainly a positive development, it’s not a complete solution for all of the financial pressures facing retirees.
Understanding how your Social Security benefit works—recognizing deductions, staying aware of rising expenses and planning ahead—remains critical.
Use the boost as an opportunity to review your financial plan, adjust your budget and make informed decisions with the support of a financial advisor if needed.
FAQs
When will I start receiving the 2.8% COLA increase on my benefit?
The increase will apply beginning with your January 2026 benefit payment and will be reflected in the check issued in December 2025 (or later depending on your payment cycle).
Does the COLA increase apply to both the primary beneficiary and a spouse’s benefit?
Yes — the COLA applies to all Social Security retirement and spousal benefits, so spouses eligible for a benefit from someone else’s work record should see their payment rise as well.
Will my Medicare premiums increase at the same time as the benefit boost?
Not necessarily at the same time, but Medicare Part B and other associated premiums may be adjusted based on healthcare cost trends, which can reduce the net amount of your benefit increase.