3 Facts About the 2026 Social Security Cost-of-Living Adjustment (COLA) That Could Surprise Retirees

Key Points

• The Social Security Administration will announce the 2026 COLA on Oct. 15.

• It could impact your benefits even if you haven't claimed Social Security yet.

• Many retirees will likely keep less than the COLA increase due to multiple factors.

• The $23,760 Social Security bonus most retirees completely overlook ›

We're just weeks away from determining the annual cost-of-living adjustment (COLA) for Social Security. On Oct. 15, the Bureau of Labor Statistics will release the Consumer Price Index numbers from September, providing the final data point needed for calculating the 2026 COLA.

With tens of millions of seniors relying on Social Security for the majority of their income, every single dollar makes a difference. Analysts currently expect the final calculation to reveal a COLA of 2.7% or 2.8%.

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However, there are some important facts all seniors need to consider when it comes to the Social Security COLA. And these three may come as a bit of a surprise to many.

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1. The COLA impacts delayed benefits too

You become eligible to claim benefits starting at age 62, but you can delay your benefits as long as you want. Each month you delay benefits (up until age 70) will result in a bigger monthly check down the road. That leads many retirees to wait to claim benefits as long as possible in order to maximize their monthly payment.

But it wouldn't be fair for those delaying their benefits not to get the added boost from the COLA. As a result, anyone over age 62 will see their future benefits also get the COLA at the start of next year even though they haven't claimed Social Security yet.

This is a very powerful fact. It means the COLA will have a compounding effect on the standard increase in benefits from delaying Social Security.

So, if you're worried about missing out on the above-average COLA that analysts expect for this year, you shouldn't be. There's no need to rush out and claim your benefits in December just to get the COLA. You'll get the benefit regardless.

2. You might not receive the full COLA in your monthly payment

There are a few things that could come out of your monthly Social Security payment before it gets deposited in your bank account. One of the most common deductions for retirees age 65 and older are Medicare Part B premiums.

Unfortunately, rising medical costs and utilization will push Medicare to increase its monthly premiums quite a bit next year. The Board of Trustees estimated next year's Part B premium for the average household will climb from $185 per month this year to $206.20 in 2026. That's an 11.5% increase.

For the average retiree with a $2,000 monthly benefit this year, a 2.8% COLA will increase their monthly payment $56. But $21.20 of that increase will go toward higher Medicare premiums, leaving them with just $35 extra to spend on everything else each month.

3. The COLA could push more of your benefits into taxable territory

Most people know that as your income goes up, your taxes can go up. Thankfully, the IRS issues inflation adjustments for each tax bracket every year, which means you'll only face a higher tax rate if your income growth outpaces inflation (and hopefully it does).

But Social Security income is a bit different. Its taxation relies on a metric called combined income, which is equal to half your Social Security benefits, plus your adjusted gross income, plus any untaxed income. If your combined income exceeds certain thresholds, a portion of your Social Security benefits become taxable.

Here's the catch. The thresholds for combined income haven't changed in over 30 years. No inflation adjustments were ever built into the law. So, if you're combined income exceeds $25,000 as an individual or $32,000 as a married couple, some of your benefits may be taxable. And the annual COLA will likely push more of your benefits into taxable territory as a result.

Understanding these important mechanisms built into the Social Security law can help you optimize your financial plans for retirement.

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