Social Security recipients are expecting a tiny increase in 2026, according to a predicted cost-of-living adjustment of 2.6 to 2.8 percent. On the surface, that amounts to an additional $50 to $55 per month for the average retiree.
Even minor gains are welcomed by seniors on fixed incomes. However, experts caution that the increase may be largely offset by increasing Medicare premiums and related healthcare costs, leaving many beneficiaries with far less take-home income than projected.
For many years, seniors have been frustrated by the link between Social Security benefits and Medicare premiums. When one increases, the other usually follows.
Estimates indicate that the standard Medicare Part B premium will increase by 11.6 percent from 185 dollars in 2025 to 206.50 dollars in 2026. That 21.50 dollar increase could absorb about 40% of the anticipated Social Security increase, decreasing the net benefit to around 32 dollars per month for the average beneficiary.
This tug-of-war between cost-of-living adjustments and healthcare costs underlines one of the most significant challenges for older Americans: even when benefits increase, medical expenditures sometimes grow faster.
Premiums, deductibles, and drug costs set to climb
Medicare Part B premiums are just one part of the puzzle. Deductibles are also expected to climb, with the yearly Part B deductible likely increasing by 12%, from $257 to $288. That means retirees may face increased out-of-pocket expenses before coverage even begins.
Prescription drug coverage under Medicare Part D is also likely to alter. While the Inflation Reduction Act established a limit on out-of-pocket drug prices, it will rise from 2,000 to 2,100 dollars in 2026. Meanwhile, prices for Part D coverage are projected to rise as federal subsidies are reduced, potentially allowing rises of up to $50 per month depending on plan.
Higher-income recipients may also experience modifications to income-related levies known as IRMAA. Part B surcharges are expected to increase by 1%, while Part D surcharges will rise by 6%. These fees apply to retirees with incomes above particular levels, adding another layer of expenditure for those who fall into that group.
Many seniors will see the cumulative effect of these hikes in their monthly budgets. A retiree expecting a 54-dollar COLA hike may see little to no actual increase once Medicare deductions and increased out-of-pocket costs are taken into account.
