Monthly checks getting modest boost

Social Security beneficiaries will see a 2.8% increase in their monthly payments starting in January 2026, translating to an average raise of approximately $56 per month. The Social Security Administration announced the cost-of-living adjustment, known as COLA, which aims to help seniors maintain purchasing power as prices rise.

The agency will mail letters in December informing beneficiaries of their new payment amounts. Those with personal accounts on the Social Security website can access their COLA notices online earlier. More than 74.5 million Americans received Social Security benefits as of August, including retired workers, disabled individuals, survivors of deceased workers and those receiving Supplemental Security Income.

However, the adjustment has left many older Americans feeling dissatisfied with what they consider an inadequate response to their rising expenses. The modest increase comes at a time when healthcare costs continue climbing and inflation remains above historical averages.

Most seniors say the raise falls short

An AARP survey of 1,000 Americans aged 50 and older conducted between Sept. 18 and 23 revealed widespread disappointment with the cost-of-living adjustment. Only 22% of respondents agreed that a COLA around 3% would be sufficient to keep pace with rising prices, while 77% disagreed.

The sentiment crossed political party lines, with 75% of Republicans, 82% of independents and 79% of Democrats expressing dissatisfaction with the adjustment level. When asked what COLA would actually help them afford everyday living expenses, 72% of older Americans indicated they needed 5% or higher, with 26% saying an 8% increase would be necessary.

Independent Social Security and Medicare policy analyst Mary Johnson noted that rising Medicare premiums alone could fully consume the COLA for many seniors in 2026, leaving them with no actual increase in their spending power.

Medicare costs threaten to erase gains

The Centers for Medicare & Medicaid Services has not yet announced 2026 Part B premiums, but Medicare Trustees estimate the standard monthly premium will rise $21.50 to $206.50 from the current $185. This would represent one of the largest dollar increases in program history, approaching the record $21.60 jump set in 2022.

1. Part B coverage: This portion covers outpatient care, doctor services, durable medical equipment and preventive services. Premiums are automatically deducted from most Social Security payments.
2. Part D plans: Some prescription drug plans are increasing premiums by as much as $50 in 2026, the maximum allowed under a stabilization demonstration program. The number of available standalone Part D plans has dropped by half since 2024, giving seniors fewer options.

Johnson provided her own situation as an example. Her current drug plan would cost $1,079 next year, up from $395 in 2025. After shopping around, her least expensive option that covers her medications would cost about $605, still representing a $210 increase or 53% jump from her current plan.

COLA trails current inflation

The 2.8% increase falls below the decade-long average of 3.1% and also lags behind current inflation rates. Annual inflation stood at 3% in September according to the Bureau of Labor Statistics, exceeding both the Federal Reserve’s 2% target and the long-term average of around 2.5%.

Many economists predict inflation will remain above 3% next year, potentially boosted by tariff policies. This creates a situation where the backward-looking COLA calculation fails to keep pace with actual price increases that seniors face in real time.

Kim Scouller, a financial professional with World Financial Group, explained that even when income rises a few percent, compounding inflation quietly erodes purchasing power year after year. When prices rise faster than benefits, every dollar loses value.

Growing poverty concerns

The inadequate adjustment comes as poverty rates among seniors have already begun climbing. Census Bureau data from August showed poverty among adults at least 65 years old rose from 14.2% to 15% in 2024, making it the only age group that saw an increase. Using the most comprehensive poverty measure, seniors now have the highest poverty rate among all age groups.

Ramsey Alwin, president and chief executive of the National Council on Aging, emphasized that the modest COLA increase will not provide true financial security for struggling seniors. Experts warn that many more older Americans may fall into poverty if they cannot keep up with rising expenses for housing, healthcare, food and other necessities.

The Social Security Administration calculates COLA annually based on average increases in the consumer price index for urban wage earners and clerical workers from July through September, creating a system that some advocates argue fails to adequately reflect seniors’ actual spending patterns.