The Projected Social Security COLA for 2026 Is Out. It May Look ‘Pretty Underwhelming.’

Higher prices for essentials make it difficult for seniors to cover their costs with their Social Security benefits. (Spencer Platt/Getty Images)

Key Points

About This Summary

• Social Security benefits are expected to increase 2.8% next year due to rising inflation.
• The 2.8% cost-of-living adjustment may not offset higher costs for groceries and healthcare.
• Medicare Part B premiums are expected to rise, reducing the impact of the Social Security increase.

Rising inflation has bumped the expected raise for Social Security benefits next year to 2.8%, not enough to cover higher prices on essentials from groceries to healthcare.

August’s consumer price index, released Thursday, inched up to 2.9%, higher for a fourth straight month. The annual cost-of-living adjustment is based on a CPI subset that increased 2.8% over the past 12 months.

That increase pushed the 2026 expected cost-of-living adjustment to 2.8% from 2.7% last month, according to Mary Johnson, an independent Social Security and Medicare policy analyst who calculates the projection. Separately, the Committee for a Responsible Federal Budget also projected a 2.8% COLA for next year.

The Social Security Administration ordinarily announces the COLA for the coming year in October, when the third-quarter inflation data are complete. The raise is calculated by comparing the average inflation rates for the third quarter of the current year and the previous.

A 2.8% raise would add $54.70 to the average monthly retirement benefit of $1,955.

“That’s apt to look pretty underwhelming to most Social Security recipients,” Johnson said in a statement.

Most beneficiaries won’t receive the full raise because of an expected increase in Medicare Part B premiums, which are automatically deducted from the checks of enrollees.

The standard Part B premium is forecast to rise to $206.20 a month next year, from $185 this year, the government reported in June. Higher earners pay more.

Beneficiaries with stand-alone Part D drug plans may face hefty premium increases next year as well because of reduced federal support for a Part D premium stabilization program, according to KFF, a health policy nonprofit.

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com