Medicare premiums rose nearly 10% to $202.90. This consumed much of the 2.8% Social Security COLA.
Social Security benefits have lost 20% of buying power since 2010 according to the Senior Citizens League.
COLA uses CPI-W that tracks urban worker expenses instead of senior spending on high-inflation healthcare and housing.
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If you’re collecting Social Security, you probably noticed that your January check was larger than your checks in 2025. That’s because you got a Cost of Living Adjustment (COLA) in 2026. Unfortunately, there’s a serious problem with this Cost of Living Adjustment, and it’s one that could put your finances at risk over the long-term.
Here’s the big issue with the COLA retirees received this year, along with some details on why the problem is likely to be an ongoing one that could mean these benefits don’t go as far as you need them to in paying for your essential costs.
The 2026 COLA that retirees collected this year increased Social Security benefits by 2.8%, up from the 2.5% COLA that retirees got in 2025.
Unfortunately, many retirees are not actually going to end up getting a 2.8% raise, and the COLA is unlikely to accomplish what it is supposed to for seniors, even for those who get the full amount.
Many retirees are going to see their payments rise by less than 2.8% because Medicare premiums come out of Social Security checks for most people who receive government insurance coverage through the Medicare program. And, unfortunately, Medicare premiums increased this year along with Social Security checks — so while you’re getting a Social Security raise, a good portion of it is going to be used to pay for your Medicare coverage.
Medicare premiums increased by $17.90 in 2026, rising from $185 in 2025 to $202.90 this year. This is close to a 10% increase in premiums. It’s a big increase, and it is reflective of a broader problem.
While Social Security Cost of Living Adjustments are supposed to help seniors keep pace with inflation by increasing benefits when prices go up, the things that seniors tend to spend the most on (like housing and healthcare) tend to increase in price at a higher rate than the COLA increases. So, while seniors see their checks increase in most years, their buying power usually goes down.
This issue is a big one, with the Senior Citizens League estimating that benefits have lost around 20% of their buying power since 2010.
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So, why aren’t COLAs keeping pace with inflation, even though that is the entire purpose of the periodic benefits increases? It’s because the formula used to calculate the COLA has a problem.
COLAs are calculated based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The benefits increase is based on the average increase in the cost of goods and services included in CPI-W during the relevant quarter. But, urban wage earners and clerical workers don’t spend as large a share of their money as seniors do on those high-inflation categories mentioned above.
The Senior Citizens League and other experts have advised a switch to a different price index that more accurately measures senior spending, but since this would result in larger benefit increases most years, and Social Security’s trust fund is already in danger of running short, this type of change would cause long-term problems by leading to the trust fund running dry faster. That would lead to automatic benefit cuts happening.
The problem, unfortunately, is a difficult one to solve because retirees need more money to avoid losing ground, but giving them more puts their benefits at risk. The 2026 COLA demonstrates this problem clearly, and it’s one that lawmakers need to consider finding a solution to. In the meantime, seniors should consider working with a financial advisor who helps them create a plan for a secure retirement, even as their Social Security benefits lose ground.
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