Why the 2026 Raise Might Not Feel Like a Pay Bump

Even though the COLA is designed to offset inflation, many retirees say they still feel squeezed. The reality is that rising living costs, health care inflation, and higher Medicare premiums can quickly eat away at those increases.

1. Medicare Premiums May Reduce Your Net Increase

Most retirees have their Medicare Part B premiums deducted directly from their Social Security checks. These premiums are expected to rise in 2026, potentially by double digits. If the monthly Part B premium jumps by $20 or more, it could take a significant bite out of the COLA raise.

2. Health Care and Housing Inflation Remain High

Health care, prescription drugs, and housing are among the fastest-growing expenses for seniors. Unfortunately, the CPI-W, the inflation index used to calculate COLA, doesn’t fully reflect how retirees actually spend their money.

If your biggest expenses are in health care or rent, your personal inflation rate might be higher than what the COLA covers.

3. Taxes Could Eat Into Your Raise

Depending on your total income, up to 85% of your Social Security benefits may be taxable. If your COLA increase pushes your income higher, you could owe more in taxes, reducing your take-home retirement income.