2026's Social Security Cost-of-Living Adjustment (COLA) May Be Higher Than Expected. Here Are 3 Reasons Not to Celebrate That

Key Points

• Social Security benefits are eligible for a cost-of-living adjustment (COLA) each year.

• So far, projections are calling for a 2.7% COLA in 2026, which would be higher than 2025's COLA of 2.5%.

• Even if next year's COLA is more generous, retirees may not enjoy the large income boost they're expecting.

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

There are many people who end up collecting a monthly Social Security benefit for decades. And that's what makes the program's cost-of-living adjustments (COLAs) so valuable and important.

Each year, Social Security is eligible for a COLA automatically. If there's a rise in inflation from one year to the next, benefits go up -- it's that simple. If there's no increase, or a decrease, benefits remain flat. They can't go down from one year to the next, thankfully.

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The Social Security Administration typically announces each year's COLA in October. So at this point, we're just a few weeks away from finding out what 2026's raise will look like officially. However, there are clues as to what to expect in the new year.

Initial estimates from the nonpartisan Senior Citizens League, an advocacy group, are pointing to a 2.7% COLA in 2026. If they're right, or if that number increases beyond the latest projection, then 2026's COLA will come in higher than 2025's 2.5% increase.

But even if next year's Social Security COLA ends up being higher than expected, that's not necessarily something to celebrate. Here's why.

1. Your COLA might still fall short

The purpose of Social Security COLAs is to help benefits keep up with inflation. But data from the Senior Citizens League shows that insufficient COLAs have caused seniors to lose quite a lot of buying power over time.

Specifically, between 2010 and 2024, Social Security recipients lost 20% of their buying power. That's huge. And so even if 2026's COLA is higher than 2025's, it may still fall short.

2. A Medicare Part B hike could eat into your raise

Seniors who collect Social Security while enrolled in Medicare pay their Part B premiums out of their monthly benefits automatically. But the cost of Medicare Part B could rise in 2026. And if that happens, it will eat into seniors' COLA.

In 2025, the cost of Medicare rose about $10 compared to 2024. It's not unreasonable to think something similar might happen this time around, too, leaving seniors with less money.

3. A larger COLA means inflation is more of a problem

Not only are Social Security COLAs meant to keep up with inflation, but they're calculated based on inflation data. What this means, though, is that when there's a larger COLA, it's an indication that living costs are rising at a more rapid pace.

If 2026's Social Security COLA is more generous than expected, it will come at the cost of higher prices for consumers. That extends to retirees on a fixed income who may not have the wiggle room in their budgets to absorb higher costs, even if their Social Security benefits do rise a bit.

It's natural for seniors on Social Security to want each year's COLA to be as large as possible. But even if 2026's COLA comes in higher than initial expectations, it's not necessarily going to be a great situation for retirees. It's important to recognize that now rather than be caught off guard later.

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