Social Security 2026 COLA Update: Cost-of-Living Adjustment May Rise to 2.7%

Inflation is easing, but higher Medicare premiums may cancel out benefit gains for millions of Americans.

Social Security recipients may receive a 2.7% raise in 2026, according to a new estimate following the most recent inflation report. This figure is up from last month's forecast of 2.5%, signalling a modest but meaningful cost-of-living adjustment (COLA) in response to ongoing inflation trends.

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The cost of living adjustment for 2026 aims to help retirees, disabled workers, and other beneficiaries maintain their purchasing power in the face of rising expenses though many say it's still falling short, especially when paired with climbing healthcare costs.

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What’s Driving the COLA Estimate Up?

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The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) used to calculate the annual COLA rose 2.6% in June, while the broader inflation index climbed 2.7% from May’s 2.4%, according to the U.S. Bureau of Labor Statistics.

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Although the Federal Reserve’s inflation target remains at 2%, persistent increases in goods and services have prompted this higher COLA projection for 2026.

“It’s not uncommon for Part B premiums to consume much or even all of the annual COLA, leaving little extra to cover other big cost increases,” said Mary Johnson, an independent Social Security and Medicare policy analyst.

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How Fast Are Medicare Premiums Rising?

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One major concern among retirees is that the anticipated COLA may be outpaced by rising Medicare costs, which are automatically deducted from monthly Social Security payments.

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According to the 2025 Medicare Trustees Report, Medicare Part B premiums are expected to rise from $185.00 in 2025 to $206.50 in 2026 an increase of $21.50 per month or 11.6%. That would mark the largest annual jump since 2022, when premiums surged by 14.5%.

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This significant rise means even a 2.7% COLA in 2026 may not result in a net gain for many beneficiaries.

“Medicare recipients are quick to point out that Part B premiums can frequently take much or even all of the annual COLA,” Johnson added. “This leaves little room to manage increases in housing, groceries, or utilities.”

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Who Is Hit the Hardest?

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For low-income beneficiaries, the situation is especially challenging. If the Social Security 2026 COLA increase is 2.7%, those receiving $800 or less per month could see their entire COLA consumed by the Medicare premium hike.

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“This is particularly true for individuals receiving low Social Security retirement, spousal, or survivor benefits,” Johnson explained.

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How Is the COLA Calculated?

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The Social Security Administration calculates the cost of living adjustment for 2026 using the average CPI-W figures from July through September 2025. Any increases in those months compared to the same period in 2024 will determine the final COLA percentage, which will be officially announced in October.

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Last month, CPI-W rose by 2.6%, continuing the trend of slow but steady inflation. This makes July’s data particularly important, as it’s the first month that counts toward the 2026 calculation.

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Worried Your COLA Increase Will Be Eaten by Medicare? We Can Help

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Even with a projected 2.7% Social Security COLA in 2026, rising Medicare premiums may leave you with little to no net gain. At Federal Pension Advisors, we help federal retirees understand how to protect their income, optimize their benefits, and prepare for rising healthcare costs. Choose us for federal retirment planning, financial planning etc.

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How Many People Are Affected?

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As of May 2025, over 74.2 million Americans were receiving Social Security benefits. This includes:

• Retired workers
  
  
• Disabled workers
  
  
• Survivors of deceased workers
  
  
• Supplemental Security Income (SSI) recipients
  
  

The average monthly benefit was $1,860.64, but with rising Medicare premiums and inflationary pressure, even small changes in COLA can have a large impact on household finances.

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Bottom Line

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The Social Security COLA 2026 estimate update is now 2.7% slightly higher than previous projections. But any relief from this 2026 cost of living adjustment may be tempered by a sharp increase in Medicare Part B premiums, which are rising more than four times faster than COLA.

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For retirees, the key takeaway is this: stay informed, budget conservatively, and prepare for Medicare costs to continue rising even if your benefits go up next year.

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FAQ'S

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What is the predicted COLA for Social Security in 2026?

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The predicted cost-of-living adjustment (COLA) for Social Security in 2026 is 2.7%, based on the latest inflation data. This estimate may change depending on CPI-W figures from July to September 2025, which are used to calculate the final COLA announced in October.

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How much will Medicare Part B cost in 2026?

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The standard Medicare Part B premium for 2026 is projected to be $206.50 per month, up from $185.00 in 2025. This represents an increase of $21.50 or 11.6%, according to the 2025 Medicare Trustees Report.

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What will the COLA for Social Security be in 2025?

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The official COLA for Social Security in 2025 is 3.2%. This adjustment was announced in October 2024 and took effect in January 2025, increasing monthly benefits for millions of retirees and disabled workers.

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What is the new Social Security check for January 2025?

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The average Social Security benefit in January 2025 rose to approximately $1,907 per month, reflecting the 3.2% COLA. Individual payments may vary based on work history, earnings, and Medicare premium deductions.

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