Here’s why Social Security beneficiaries may get only a pittance in their monthly checks beginning in 2026. Preliminary estimates point to a COLA of 2.7% or maybe even 2.8%. If approved, this increase would amount to a little more than $54.70 additional dollars each month for the average retiree. This would increase their monthly benefit to approximately $2009.70. In addition to the expected COLA, this increase comes on the heels of other recently announced increases, including a 2.5% increase for beneficiaries in 2025.
The suggested change is proposed during a period of growing anxiety about inflation and its effects on fixed-income retirees. The base monthly premium for Medicare Part B is already poised to go up sharply. It will increase by $21.50, making the new total $206.50 per month, an increase from the current $185. This policy shift is placing yet another financial burden on beneficiaries who are already struggling with increased cost of living.
Over the last 20 years, the COLA has averaged 2.6%, but as you can see in recent years the boosts have fluctuated widely. Beneficiaries received historically high Cost-of-Living Adjustments (COLA) of 5.9% in 2022 and 8.7% in 2023, with a projected 3.2% increase in 2024. These variations are illustrative of the struggles retirees are continuing to deal with, especially with inflation being a constant threat.
The average monthly retirement benefit for new Social Security beneficiaries today is just $1,955. With a projected Cost-of-Living Adjustment (COLA) of roughly $54.70, retirees will be happy to see this increase. That said, many beneficiaries will tell you that they are losing the battle to stay ahead of skyrocketing expenses. Over two-thirds have already cut discretionary spending as a result of benefit increases failing to keep up with the rate of inflation.
Retirees are more likely to feel the effects of inflation. It’s important for them to understand how these shifts impact their bottom line. Inflation has been a considerable crushing blow to everyone, especially those dependent on fixed income investments. Bonds rarely yield returns that outstrip the rising cost of living.
Engaging with an experienced financial advisor will arm retirees with the insights and strategies they need to effectively navigate these complexities. Only one in three retirees express confidence in their knowledge of the Social Security program. That’s an indication of a very expensive knowledge gap for most beneficiaries.
Fears of future inflation abound. That’s right—about two-thirds of Social Security recipients agree that new tariffs will increase inflation beyond what they’ll be able to offset with their annual COLA adjustments. This poignant lamentation reveals the importance of better financial literacy and understanding for retirees.
The Social Security Administration determines the COLA based on data from the third quarter. They target a narrow measure of inflation index, the Consumers Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This new approach hopes to deliver a better picture of the costs that retirees are having to deal with.