With the impatience and nervousness with which a child awaits Christmas presents, Social Security Administration (SSA) beneficiaries awaited the announcement of the new Cost of Living Adjustment (COLA) percentage for 2026. After a delay in the publication of the CPI-W data by the Bureau of Labor Statistics (BLS), and due to the government shutdown active since October 1, 2025, the announcement originally scheduled for October 15 finally took place on the 24th. It has already been confirmed that the percentage for the new COLA will be 2.8%, which is applicable to all Social Security beneficiaries.
However, due to the increase in the cost of some parts of Medicare, this increase could be absorbed and may not result in a noticeable raise for everyone. While Medicare Part A will remain free, Part B is expected to experience a 12% increase. Additionally, Part D or Advantage plans could also be more expensive, so the 2.8% increase might not even be reflected. However, it is advised to wait for the official data and figures before making decisions.
The Medicare open enrollment period is active until December 7, so you can make changes to your Medicare plans if you wish. In this retirement scenario in the United States, returning to work or doing so part-time is one of the options that could add more value to retirees’ finances.
Cost of Living Adjustment (COLA)
After much anticipation, Social Security Administration (SSA) beneficiaries now know the COLA percentage for the upcoming year, 2026. Its announcement was delayed due to the late release of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data by the Bureau of Labor Statistics (BLS), as well as the ongoing government shutdown in the country.
After being postponed from October 15 to October 24, we finally have the figure: the COLA for 2026 will be 2.8%. This translates to an average increase of about $56 per month. Although this is one of the most awaited announcements by retirees, the truth is that many of them will not even see this increase reflected in their monthly checks.
Increase in Medicare Costs
The most common situation is that Americans apply for Social Security benefits at the same time as enrolling in Medicare. However, although Medicare eligibility begins at age 65, some apply for Social Security at age 62, albeit with a reduced rate. The problem they will now face is that Medicare costs will also increase, so the COLA increase will end up being diluted by them.
- Part A. Will remain free and cover hospital care.
- Part B. Covers outpatient care and is not free. It has a monthly premium that is reassessed each year, and it is estimated that this year it will see a 12% increase. This means that those who were paying $185 per month will now pay $206.50. This translates to receiving $34.50 instead of the $56 per month COLA amount. This increase is not an official figure, so it may vary. However, it is expected that whatever the figure may be, it will absorb a significant portion of the new COLA.
- Part D and Medicare Advantage will also experience a cost increase, so if it is something you also pay for, you should take it into account.
What to do in this situation?
If Medicare is among your monthly expenses, it is recommended that you wait for the official data before doing the calculations and adjusting your budgets. According to experts, relying solely on Social Security income to ensure savings and a comfortable retirement is a mistake, so returning to work or doing so part-time is considered a more effective option. If you believe you need to make adjustments to your Medicare coverage, the open enrollment period is active until December 7. During this time, you can make all the changes you deem appropriate, finding less expensive plans that suit your needs.