Social Security’s 2026 cost-of-living increase (COLA) is 2.6% to 2.7%, a steady increase from previous estimates and a remarkable shift in estimating throughout 2025. Although the increase will be of relief to more than 74 million Americans on Social Security benefits, higher Medicare Part B premiums may counter the increase for lower-income beneficiaries, bringing about a budget tightener that will affect millions of vulnerable seniors.
COLA forecast development: Cautiously bullish to conservative
COLA forecast development for 2026 has been rising steadily throughout 2025, reflecting the difficult balancing act between inflationary forces and policy risks. The Senior Citizens League (TSCL) began 2026 COLA projections at a conservative estimate of 2.1% in January, based on initial inflation reports and economic forecasts. This was a possible decline from 2025’s 2.5% increase and would have been the lowest spike since 2021’s low 1.3% increase.
But with economic data changing and inflationary pressures ongoing, TSCL and free-lance analyst Mary Johnson also continued to update their estimates higher progressively. In February, TSCL had increased its estimate to 2.3%. March saw another incremental boost to 2.3%, and April saw the estimate reach 2.4%.
The momentum carried over to spring and summer, with May coming in at a 2.5% estimate from both TSCL Johnson. June held the same prediction, but July had a whopping surge, with TSCL projecting 2.6% and Johnson projecting 2.7% – her year’s high.
The Trump factor: Tariffs and economic uncertainty
The increase in COLA projections higher has been blamed substantially on the inflationary effect of President Trump’s trade policies. Originally suspended for 90 days, the administration’s trade policies started appearing in consumer prices by mid-2025.
Johnson reported that “Trump administration tariffs are beginning to affect the prices consumers pay, driving inflation higher.” The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) used to calculate Social Security COLAs increased 2.6% in June from a year ago, above last month’s 2.3% increase.
The Medicare premium squeeze: A $21.50 monthly pain
While the COLA adjustment provides relief, the big test awaits in the form of Medicare Part B premium increases. The Medicare trustees’ annual report estimates the Part B premium increasing $21.50 per month in 2026 from $185 to $206.50 – an 11.6% increase.
This is the largest Medicare premium hike since 2022 and would erase COLA gains entirely for tens of millions of Americans. Independent analyst Mary Johnson cautioned that “if the COLA in 2026 would be 2.7%, a Part B premium hike of $21.50 would devour the entire COLA of beneficiaries who are getting around $800 or less.”
Effect on low-income seniors
The Medicare premium hike disproportionately harms vulnerable communities. TSCL analysis has found that nearly 7.3 million American seniors live on less than $1,000 a month. For these individuals, the hike in premium could swallow not only the COLA increase but even take a bite out of their net Social Security benefits.
This is exacerbated by the fact that Medicare premiums are withheld automatically from Social Security benefit checks for an overwhelming majority of recipients. As premiums increase more quickly than COLAs, recipients effectively see a reduction in benefits despite a nominal increase.
