The 2026 Social Security COLA Is Already Failing Retirees

• Social Security COLA increased 2.8% in 2026, but Medicare premiums rose from $185 to $202.90 (nearly 10%), consuming nearly a third of the average retiree’s $57.99 benefit increase.

• Healthcare inflation at 5.8% annually outpaces the expected 2.4% average Social Security increase, meaning the COLA formula fails to protect retirees’ purchasing power.

• Retirees need to plan for COLAs that don’t keep up with cost increases and increase their savings accordingly.

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Social Security is supposed to be a critical income source for retirees. Unfortunately, retirees are being let down by a big flaw in the benefits program. The flaw has to do with the Cost of Living Adjustments (COLAs) that are supposed to help seniors ensure their benefits keep pace with inflation.

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In 2026, the COLA resulted in retirees getting a 2.8% benefits increase. Unfortunately, retirees are already being let down by that benefits bump, and the trend is likely to continue and even get worse over time. Here’s why.

While retirees got a benefits increase in 2026 that was bigger than the 2.5% raise they got in 2025, the sad reality is that a good amount of this money didn’t even make it into their checks. And that’s because Medicare premiums increased so much.

For seniors 65 and over who get their insurance coverage through Medicare, Medicare premiums are taken directly from Social Security payments. And those premiums rose substantially in 2026, going from $185 in 2025 to $202.90 in 2026.  This means retirees saw their costs increase by close to 10%. And, for retirees who receive the average monthly Social Security benefit of $2,071 in 2026, the $17.90 in extra premiums took up nearly a third of their $57.99 benefits increase.

With so much of the COLA disappearing to cover one big expense, the benefits bump will do little to help seniors cope with all of their other rising costs as inflation continues to be above the 2.00% target set by the Federal Reserve.

This problem with rising Medicare premiums is just one of the many issues with the way that Social Security benefit increases are calculated. Unfortunately, the COLA formula is based on a measure of inflation that assesses how much the cost of products and services increases year-over-year for urban wage earners and clerical workers. This group tends to have different spending habits than seniors, devoting less of their income to high-inflation areas like medical insurance costs.

This trend is not going to go away, either. HealthView Services’ 2026 Retirement Healthcare Costs Data Report recently revealed that healthcare-related inflation is expected to occur at a rate of 5.8% per year based on a 65-year-old couple who retires in 2026 with average healthcare expenditures. During that couple’s retirement, Social Security benefits are only expected to increase by around 2.4% on average.

The report warns that this means a healthy 65-year-old couple would need around 84% of their Social Security benefits just to cover medical care. And for younger workers, the numbers are worse, with a healthy 55-year-old-couple spending 104% of the average monthly Social Security check on out-of-pocket medical care costs.

Clearly, with these numbers, the COLAs that are supposed to be protecting seniors are failing. Current and future retirees both need to be aware of these issues and try to take steps to shore up their savings so they will have enough to supplement Social Security when the Cost of Living Adjustments fall short and the buying power of their benefits declines.

Investing specifically for medical costs in a Health Savings Account (HSA) is an option for those who are eligible for one, but all future retirees need a plan to cope with the fact that COLAs are going to continue to let them down and Social Security benefits will buy less over time.

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