We know how big COLA will be in January, but don’t start counting your money just yet.
Impact of government shutdown on social security
Here’s what you need to know about Social Security payments during the ongoing government shutdown.
If you work full-time, the weeks leading up to your year-end performance review can be stressful. That’s because managers typically use this opportunity to share next year’s raise, if any.
Similarly, Social Security recipients tend to feel anxious come October. Because October is the month when the cost of living adjustment (COLA) for next year’s program is released.
Social Security COLAs are calculated based on the year-over-year change in the Consumer Price Index for Urban Wage and Office Workers (CPI-W) for July, August, and September. Because of this, the Social Security Administration (SSA) must wait until October of each year for the next calculation.
SSA was originally scheduled to release the 2026 COLA on October 15th, but due to the government shutdown and delays in releasing September CPI-W data, the release was pushed back to October 24th.
Now, retirees will see their monthly allowance increase by 2.8% starting in January. Based on current average monthly profits, this equates to an average increase of approximately $56 per month.
However, not all seniors on Social Security will see their checks increase by the full 2.8%.
Why some Social Security recipients lose money in the new year
Anyone who receives retirement benefits from Social Security will be eligible for the upcoming COLA program. However, some retirees claim Social Security before they are old enough to enroll in Medicare.
Eligibility for Medicare typically begins at age 65, but Americans can claim Social Security as early as age 62, albeit at reduced tax rates. However, it is common for seniors age 65 and older to enroll in Medicare and Social Security at the same time.
Medicare Part A, which covers inpatient care, is typically free for enrollees, but Part B, which covers outpatient care, is not.
There is a standard monthly Part B premium that renews annually. For seniors who have both Medicare and Social Security, their Part B premiums are automatically deducted from their Social Security benefits.
Currently, standard Medicare Part B premiums are $185 per month. However, standard Part B premiums could increase by $21.50 to $206.50 in 2026, based on projections from the Medicare Administrative Board.
If this approximately 12% increase were implemented, the average Social Security recipient on Medicare would only see an increase of about $34.50 in monthly benefits, compared to an increase of $56. This may be a bit off-putting for those who were expecting a more generous COLA to give them more financial cushion.
Of course, this $206.50 prediction is not set in stone. It may change. However, the general consensus is that Medicare Part B costs will increase by a significant percentage in 2026. So whatever the specific amount of the increase, it could have a big impact on future COLAs for Social Security recipients enrolled in Medicare.
know what happens
It would be natural to take note of the recent Social Security COLA announcements and start crunching the numbers based on the benefits you receive each month. However, if you also have Medicare, you may want to wait to see what changes will be made to Part B before planning any budget adjustments based on COLA.
Of course, Part B may not be the only thing changing in the Medicare context. Prices for Part D or Advantage plans can also be higher.
The good news is that Medicare’s open enrollment period is underway, so you have the opportunity to make changes to your coverage from now until December 7th. If you can find a cheaper Part D or Medicare Advantage plan, you may be able to reduce your overall Medicare spending and extend your Social Security check even further.
But overall, it’s important to be realistic about what future COLAs will and won’t do to your finances, especially if you have Medicare. And if you’re hoping for a more generous raise, you might want to take matters into your own hands instead.
A 2.8% COLA will raise your Social Security check in the new year a little, even if Medicare increases are taken into account. But measures such as downsizing your job, returning to part-time work, or adding a few extra hours if you’re already working part-time, can have an even bigger impact on household finances.
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