What is the COLA?
The COLA is an annual increase to Social Security and Supplemental Security Income (SSI) benefits, meant to keep pace with inflation. It’s calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July–September of the current year compared to the same period the prior year.
Why do I care and how does this Affect Me?
- If your current monthly benefit is about $2,008 (average as of July 2025) and you receive the estimated 2.7% COLA for 2026, your new benefit could be roughly $2,062 per month. CBS News+1
- But if your Medicare Part B premium is deducted from your Social Security check and that premium increases (as projections predict), your actual increase will only be a few dollars extra. GOBankingRates
- The COLA each year is automatic if the CPI-W indicates a positive change; however, benefits could stay flat if inflation (for that index) is very low or negative.
What to Watch Ahead
- The official 2026 COLA announcement will be in October 2025, once the CPI-W data for July–September is finalized. However the current government shutdown might cause more delays Social Security+1
- The current projection (~2.7%) could change up or down depending on inflation trends in the coming months.
- If you’re receiving Social Security benefits: check your December/January statement, review your deductions (Medicare, tax withholding), and plan how much extra you’ll get (and how much you’ll actually keep).
- If you expect to claim benefits soon: understand how your benefit amount, deductions, and COLA could affect your first year of payments.
Overall
At first glance COLA seems like a win, but for many retirees it doesn’t translate into much. It does not translate into much because Medicare Part B premiums are increasing. These increases are very likely to be amounts larger than your COLA raise. So a significant portion of your “cash increase” could vanish before you even use it. The cost of living increase never really has done much, but this time around many will not be helped at all.
The “Hold Harmless” Provision: Protection With Limits
There is a rule known as the “hold harmless” provision. It protects many beneficiaries from having their Social Security checks decrease because premiums rise faster than their COLA. Medicare Interactive+1
However:
It does not apply to individuals who are newly enrolled in Medicare, those who pay higher premiums due to the income-related monthly adjustment amount (IRMAA), or those whose premiums are not taken from Social Security. medicareresources.org+1
It ensures that your net Social Security benefit won’t drop—but it doesn’t guarantee a meaningful increase if your premium soon equals or exceeds your COLA.