2 Reasons Your 2025 Social Security COLA Might Fail You

When the Social Security Administration announced last October that benefits would be getting a 2.8% cost-of-living adjustment, or COLA, in 2026, the reaction was probably mixed.

Some seniors were probably happy to learn that 2026's raise would outpace the 2.5% COLA that came through in 2025. Others were probably hoping for a larger boost to their monthly benefits.

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No matter what camp you fell into it, if you're on Social Security, you should be aware that your 2026 COLA might fall short over the next 12 months. Here's why -- and what you can do about it.

1. Inflation could outpace it

The whole purpose of Social Security COLAs is to allow seniors to keep up with inflation. The problem is that Social Security COLAs have historically failed to do that. And there's a big reason living costs could outpace this year's COLA in particular -- tariffs.

Tariffs could continue to drive consumer prices upward, leading to a rise in inflation. Of course, the opposite could happen, too. Tariffs could fuel an economic slowdown that eventually leads to lower prices. But at this point, it's too soon to know.

2. Medicare Part B premium hikes could erode it

Seniors who are enrolled in both Social Security and Medicare pay their monthly premiums for Part B out of their benefits directly. But the cost of Part B is a lot higher this year than it was last year, and that's going to eat away at seniors' 2.8% raise.

In 2025, the standard Medicare Part B premium was $185 a month. This year, it's $202.90. That $17.90 increase will leave some Social Security recipients with a lot less money.

How to cope with a COLA that may not go very far

If you're worried that your 2026 Social Security COLA won't help your financial situation improve this year, you should be. The purpose of COLAs is to help Social Security recipients maintain their buying power -- not increase it.

But it's questionable as to whether this year's COLA will even allow seniors to keep up with their bills. And if you find that your benefits are falling behind, it's important to set yourself up with outside income. If you don't have investments to tap, going back to work may be your best option.

The good news is that you're allowed to work while collecting Social Security. Once you've reached full retirement age, you can earn any amount without having benefits withheld. But if you're younger than full retirement age, you'll be subject to an earnings test.

Still, Social Security's earnings test gives you a pretty decent opportunity to make money without a negative impact on your benefits. You can earn up to $24,480 this year, or $65,160 if you'll be reaching full retirement age before the end of 2026, before withheld benefits come into play.

In addition to boosting your income to make up for this year's COLA, you can also try reducing your spending. But a lot of Social Security recipients already live pretty frugally. So you may find that your best bet is to set yourself up with other income to supplement those monthly benefits.

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