Social Security's COLA Estimate For 2026 Just Went Up Again

Predictions for the future of programs like Medicare, Medicaid, SNAP, with Social Security are grim. In fact, in February 2025, the forecast for Social Security's 2026 cost of living adjustment (COLA) was not looking good for retirees. COLA is intended to offset inflation costs that Americans face each year, so that they can keep up with prices. New COLA details are released regularly to help retirees, and other Social Security recipients, prepare their finances accordingly.

The Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine annual adjustments to Social Security benefits. In June 2025, the CPI-W went up to 2.6% as inflation hiked to 2.7%, an uptick from 2.4% in May, and higher than the Federal Reserve's target of 2% overall inflation. As inflation continues to creep up, it's especially concerning to consider how much worse inflation might continue to be pushed upwards as a result of Trump's tariffs. 

The good news is that the Social Security Administration is attempting to keep in lockstep with inflation by ensuring COLA rates align with inflationary pressures. The bad news is that, per USA Today, while it's estimated that COLA could go up to as much as 2.7% in 2026 –- which is higher than the previously forecast 2.5% –- the rate will likely still not be enough for most retirees due to the fact that Medicare premiums are steadily increasing with no signs of coming down next year.

The real threat that retirees, particularly low-income seniors, need to worry about is losing Medicaid as part of Trump's One Big Beautiful Bill Act, along with increasing costs for Medicare Part B. Most Social Security recipients have Part B costs deducted automatically from their benefit payments. However, this standard premium is projected to go up from $185 to $206.50 next year, the biggest hike from one year to the next since the 2021 to 2022 jump, as highlighted in the 2025 Medicare Trustees Report.

Whether you rely entirely on your Social Security benefits to cover expenses, or Social Security is only one part of your fixed income, it's important to get a clear picture of what your necessary costs are each month as well as ways to reduce your spending habits. This can be especially true as you prepare for the final 2026 COLA rate announcement in October 2025.

An option worth exploring is whether any Social Security rules might allow you to increase your benefits each month. Additionally, Realtor.com noted that retirees who are homeowners might want to think about downsizing, or moving, ahead of the 2026 COLA numbers in order to offset their housing costs. Similarly, you might consider finding part-time work to supplement your income.