What is COLA, and why does it matter
COLA is short for Cost-of-Living Adjustment. Every year, the Social Security Administration (SSA) provides recipients with a modest increase in benefits due to inflation. This assists retirees and others receiving Social Security in keeping pace with the increasing cost of food, gasoline, rent, and medication.
For 2026, the COLA is now estimated at 2.7%, an increase from earlier estimations of 2.1%. That might sound good, but to most Americans, it will not be. Why? Because other costs are also increasing, and more rapidly.
COLA 2026: From 2.1% to 2.7% in just seven months
In early 2025, experts approximated the COLA for 2026 at 2.1%. However, by July 2025, it was not the same. The Senior Citizens League (TSCL) had its estimate increased to 2.6%, while Social Security analyst Mary Johnson estimated 2.7%.
That’s a solid bump, but don’t get so excited. It’s being produced by something not that great: increased inflation. Prices are rising because of new tariffs—taxes on international goods—imposed by President Donald Trump’s second-term trade practices.
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How Do Tariffs Affect COLA?
Tariffs are intended to protect American goods by increasing the cost of foreign imports. But if the imports increase in price, that then trickles down to you—the consumer. Everyday things like:
- Refrigerators
- Microwaves
- Canned goods
- Cleaning supplies
- cocci more now. That added expense factors into the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That is the formula upon which the COLA is based.
In short:
Higher prices → Higher CPI-W → Slightly higher COLA
But that won’t necessarily put extra money in your pocket. Because something else is rising too…
The other blow: Medicare Part B premium is going up—a lot
Another big cost for retirees is Medicare Part B, which covers things like doctor visits and outpatient care. The base premium in 2025 is $185. But in 2026, it’s projected to increase to $206.50. That’s an 11.6% jump, the biggest ever.
Now here’s the problem:
Most people don’t draw a check for Medicare premiums. Instead, it comes right out of their monthly Social Security check. That is to say, even if your COLA is raised by 2.7%, a big chunk of the bump will be chomped on by Medicare costs.
So yes, you’re getting a “raise.” But you won’t feel it.
Who will be hit hardest?
Although the COLA benefits all Social Security recipients, some will feel it more than others:
- Retired seniors with no retirement savings
- Low-income retirees who live on every and each dollar of their Social Security check
- Chronic care patients, who pay more for medical care
- Senior renters, who have higher housing costs
These Americans will likely see no actual improvement in their monthly budget even after a COLA increase.
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Why Advocates Are Concerned
Special interest organizations promoting older Americans, including TSCL, are sounding the warning. They contend that it doesn’t add up when health care expenses rise higher than COLA. Some advocates are calling for caps on how much Medicare premiums can increase from year to year—especially when it eats up most of the COLA increase.
They maintain that seniors should benefit from COLA increases, not have the money go the way of other government fees.
Retirement Planning Has Never Been More Challenging
You’re already retired, or about to be, if you’re reading this. You count on Social Security to be reliable, but with volatile COLA numbers and rising medical costs, it’s getting increasingly hard to plan.
With inflation increasing due to international trade policies and tariffs from the United States, the economic future for older Americans is tenuous. While there can be some industries that benefit from the policies, average citizens—especially seniors—are left trying to stretch every dollar.
