Retirees on Social Security Could Be in for a Huge Disappointment in 2026. Here's Why.

If it weren't for Social Security, a lot of retired Americans today would not be able to make ends meet. Thankfully, those benefits pay the average retired worker a little more than $2,000 a month. And while a roughly $2,000 monthly income is not exactly living in luxury, for a good number of people, it's enough to at least cover the basics.

Meanwhile, seniors on Social Security got what seemed like good news in October. The Social Security Administration (SSA) announced that benefits would be getting a 2.8% cost-of-living adjustment (COLA) in the new year. That's a larger boost than the 2.5% COLA that came through at the start of 2025.

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The purpose of Social Security COLAs is to help ensure that recipients don't lose out on buying power due to inflation. But chances are, 2026's Social Security COLA is going to disappoint beneficiaries. And there's more than one reason why.

Don't bank on your financial situation improving

The SSA anticipates the average monthly Social Security benefit rising by $56 once next year's COLA takes effect. That's an additional $672 of income on a yearly basis.

But 2026's Social Security COLA might fail seniors for a couple of reasons. And it's important to go into the new year prepared for that possibility.

For one thing, there's a good chance that tariffs will continue to drive the cost of goods upward for consumers across the board, including retirees. That could lead to higher levels of inflation, rendering a mere 2.8% increase pretty ineffective.

But that's not the only problem. Many seniors who receive Social Security each month are also enrolled in Medicare for health coverage. And while Part A, which covers hospital care, is typically free for retirees, Part B, which covers outpatient care, is not.

Medicare Part B premiums are paid out of Social Security benefits automatically for seniors enrolled in both programs. In 2026, though, the cost of Medicare Part B is rising substantially.

The current standard monthly premium for Part B is $185. But in 2026, it's increasing by $17.90 to $202.90 per month.

That's a large increase to begin with. But it's also notably large given the fact that the upcoming Social Security COLA is moderate at best.

In fact, the typical Social Security recipient who's also on Medicare could lose about one-third of their upcoming COLA to higher Part B costs in the new year. For those who are already struggling to make ends meet, that's a big problem.

Take steps now to avoid financial pain in the new year

Unfortunately, Social Security's 2026 COLA may end up being a huge disappointment for seniors. That's the bad news. The good news is that if you know to anticipate that, you can take some steps to work around it.

First, reassess your spending. Get onto a strict budget that gives every dollar a job, and make sure you understand exactly where your money is going.

Next, think about ways to reduce your costs. That could mean downsizing to a smaller home or relocating to an area of the U.S. where life tends to be less expensive.

Working is also something to consider. You don't necessarily need to return to the workforce on a full-time basis. But a part-time job or some type of gig work could help bridge whatever upcoming income gap you may be facing.

In an ideal world, Social Security's upcoming COLA would do the job of helping millions of seniors keep up financially. In reality, that probably won't happen. The sooner you realize it, the sooner you can come up with a plan to ensure that you don't fall too far behind.

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