Social Security Benefits Get a Cost-of-Living Adjustment in 2026 -- but How Well Will it Hold Up?

Millions of seniors rely on Social Security for a big chunk of their retirement income. And it's people in that boat who are no doubt grateful for the fact that those benefits are eligible for a cost-of-living adjustment, or COLA, every year.

The purpose of Social Security COLAs is to help ensure that benefits are able to keep up with inflation. Of course, COLAs are not guaranteed, because if there's no rise in inflation from one year to the next, Social Security benefits aren't eligible for a boost.

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That wasn't the case in 2025, though. Inflation did increase on a year-over-year basis, so much so that in October, the Social Security Administration (SSA) was able to announce an upcoming 2.8% COLA for 2026. That raise is slightly higher than the 2.5% COLA seniors received at the start of 2025.

But while a 2.8% Social Security COLA is certainly better than no COLA at all, there's a good chance it won't hold up very well in the new year. Here's why -- and what you can do about it.

Putting 2026's COLA into context

To see why 2026's Social Security COLA is likely to fail seniors, it's important to understand how it's calculated. Social Security COLAs are based on year-over-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

But as the name of that index implies, the CPI-W does not track living costs for retirees specifically. Rather, it tracks the costs of urban wage earners. And as you might imagine, those costs might look very different.

Retirees on Social Security, for example, tend to spend a lot of their income on healthcare. Urban wage earners might also spend money on healthcare, but to a lesser degree. Because of this huge disconnect and the fact that healthcare costs tend to outpace broad inflation, Social Security COLAs tend to disappoint seniors, even when they're fairly generous.

Furthermore, seniors on Social Security have two things working against them in 2026 specifically that could render their upcoming COLA less effective.

First, inflation could pick up as the impact of tariffs continues to take hold. If inflation rises more than 2.8%, seniors on Social Security will lose out.

Secondly, in 2026, the cost of Medicare Part B is rising substantially, with the standard monthly premium going from $185 to $202.90. When the SSA announced its 2026 COLA, it said that following that raise, the average monthly $2,015 retirement benefit would increase to $2,071 -- a $56 boost.

However, seniors who are enrolled in Medicare pay their Part B premiums out of their Social Security benefits. That $17.90 Part B increase will therefore eat into some people's upcoming COLA, leaving them with even less of a raise.

Take action to avoid falling behind financially

While Social Security's 2026 may offer some financial relief for cash-strapped retirees, it ultimately may not go very far. And you certainly should not expect your upcoming COLA to improve your financial picture.

If you're worried that next year's COLA won't hold up well -- which is a very valid concern -- some steps to take in the coming weeks include:

• Reviewing and making adjustments to your budget
• Exploring additional income sources, like part-time or gig work
• Considering big life changes, like downsizing or relocating to a part of the U.S. where living costs are generally less expensive

While Social Security's upcoming 2.8% COLA may be reasonably generous in the grand scheme of those raises, it may not move the needle very much for struggling retirees. The sooner you recognize that, the sooner you can take steps to avoid financial stress in the new year.

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