Social Security Administration Announces 2.8% COLA Increase for 2026
Key Points – Social Security Administration Announces 2.8% COLA Increase for 2026
- 8% COLA Increase for 2026
- COLA Over the Years
- How to Calculate COLAs
- Understanding How Your Social Security Benefits and Medicare Part B Premiums Are Correlated
- 4-Minute Read
2.8% COLA Increase for 2026
The Social Security Administration announced on October 24 that roughly 75 million Social Security beneficiaries will receive a 2.8% cost-of-living adjustment (COLA) increase to their benefits in 2026.1 For an average retired work benefit, 2.8% equates to roughly ~$56 more per month; your actual increase will vary based on your current benefit. The COLA increase for 2025 was 2.5%, so Social Security beneficiaries can expect a similar COLA that they’ve had for 2025.
When Will the COLA Increase Go into Effect?
This 2.8% COLA increase will go into effect in January 2026. Additionally, there are roughly 7.5 million people who will receive a 2.8% increase to their Supplemental Security Income (SSI) payments beginning on December 31, 2025.2 There are some individuals who are SSI and Social Security beneficiaries.
The SSA usually alerts Social Security beneficiaries about how much their benefit will be beginning in December. If you have a my Social Security account, you can also access this information online.
If you prefer to receive your SSA communications via mail, that’s great. Just keep in mind that you’ll typically receive these type of updates faster (and potentially more securely) if you have a my Social Security account.
Protect Yourself Against Social Security Scams
Either way, make sure to be on the lookout for Social Security scams, which may come via phone, email, text, social media messages, and letters.3 Social Security scams are unfortunately one of many scams that you need to protect yourself against. Make sure to stay vigilant and think before you act. For example, if you weren’t expecting to receive a phone call from the SSA and they urgently request you to provide your Social Security number, don’t do it. Instead, hang up and report the potentially fraudulent outreach to https://oig.ssa.gov/report/.
Why Were COLAs So Much Higher in 2022 and 2023?
Over the past 10 years, the average COLA increase has been 3.1%. But if you’ve been a Social Security beneficiary or SSI recipient for a few years now, you might recall that the COLA increase for 2023 was 8.7%. So, why were the COLA increases so much lower for 2025 and 2026?
It’s important to remember that inflation was substantially higher in 2022 and 2023 than it is now. Rather than viewing a cost-of-living adjustment as an increase, think of it as a boost to keep up with inflation.
FIGURE 1 – Historic COLA and Average Benefit Amounts – Kiplinger/Social Security Administration4
Calculating COLAs
The Social Security Administration utilizes the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as a gauge for calculating cost-of-living adjustments. The COLA formula looks at the average CPI-W inflation from Q3 from the previous year versus Q3 from the current year. See Figure 2, below, to see the COLA increase calculation for 2026.
FIGURE 2 – COLA Increase for 2026 Calculation – Social Security Administration5
Factoring in Medicare Part B Premiums
If you’re trying to project your Social Security benefits for 2026, it’s not always as simple as multiplying your 2025 monthly benefit amount by 2.8%. Remember that Medicare Part B premiums are automatically deducted from Social Security benefits for many Social Security beneficiaries.
For 2025, the Medicare Part B standard premium is $185 per month.6 The Part B premium is estimated to rise 11.6% to $206.50 in 2026 (subject to change).7 If you’re a high-income earner, don’t forget about your Medicare IRMAA (income-related monthly adjustment amount). IRMAA looks at your Modified Adjusted Gross Income from two years prior. So, if your MAGI exceeded $106,000 (single)/$212,000 (married filing joint) in 2023, you can expect to pay more than $185 per month for Medicare Part B in 2025.
But let’s say that you expect to pay the standard Part B premium. Subtract the 2025 Part B premium amount ($185) from the projected 2026 Part B premium amount ($206.50). That comes out to an additional $21.50 per month for your 2026 premium. Now, deduct that $21.50 per month from your COLA increase for 2026 ($56 per month). Suddenly, your $56 per month COLA increase for 2026 would potentially be reduced by nearly 40% down to $34.50 per month.
The Hold Harmless Provision
Let’s say that the amount of the cost-of-living adjustment was less than the annual increase for Medicare Part B premiums. In that case, the hold harmless provision may go into effect.7 The hold harmless provision is enforced by the SSA and the Centers for Medicare & Medicaid Services and helps to prevent a reduction in Social Security benefits for eligible beneficiaries when Part B premiums rise.
However, the last time that the cost-of-living adjustment was less than the annual increase for Medicare Part B premiums was 2017.9 The hold harmless provision also won’t apply if you will be new to Medicare in 2026, are subject to an IRMAA surcharge, or enlisted in a Medicare Savings Program.10
Other Notable Social Security Adjustments for 2026
In addition to the 2026 COLA increase, there are other annual Social Security-related adjustments that are contingent on the rise of average wages. One of them is the maximum amount of earnings subject to Social Security tax. That total is $176,100 in 2025 and it will increase to $184,500 in 2026.11
Do You Have Questions About How the COLA Increase for 2026 May Impact You?
It’s important to understand the role of Social Security when determining your monthly income in retirement. Fifty-six dollars more per month might not seem like much, but remember that all it takes is $1 to push you into a higher IRMAA bracket.
If you have questions about how Social Security is taxed, the relationship between Social Security benefits and Medicare Part B premiums, Social Security claiming strategy (if you and/or your spouse haven’t claimed yet), or COLAs, start a conversation with our team below.
Resources Mentioned in This Article
- Social Security Administration Announces 2.5% COLA Increase for 2025
- 10 Ways to Fight Inflation in Retirement
- 2025 IRMAA Brackets (Income-Related Monthly Adjustment Amount)
- 7 Tips for High-Net-Worth Individuals
- What Is a Good Monthly Retirement Income?
- Taxes on Retirement Income
- 7 Financial Scams You Need to Protect Yourself Against
Other Sources
[1, 2, 11] https://blog.ssa.gov/social-security-announces-benefit-increase-for-2026/
[4] https://www.kiplinger.com/retirement/social-security/social-security-cola-2026
[5] https://www.ssa.gov/oact/cola/latestCOLA.html
[6] https://www.medicare.gov/publications/11579-medicare-costs.pdf
[7] https://www.aarp.org/medicare/medicare-part-b-premium-increase-2026/
[8] https://blog.ssa.gov/how-the-hold-harmless-provision-protects-your-benefits/
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The views expressed represent the opinion of Modern Wealth Management a Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.