The idea of a smaller Social Security COLA in 2026 has caught attention because inflation has cooled and Medicare premiums may climb.
Many beneficiaries wonder: will their benefit increase or shrink?
This article examines why a smaller Social Security COLA might happen, how it’s calculated, projections for 2026, what could reduce the net benefit, what reform proposals might lower future COLAs, how beneficiaries would be affected, and what options exist.
Why might there be a smaller Social Security COLA?
A smaller Social Security COLA is possible because inflation, especially in core goods and services, has slowed.
The COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and if that index shows smaller year-over-year gains, the COLA will shrink.
Analysts also point to rising Medicare Part B premiums eating into the increase.
Moreover, proposals exist to change how COLA is computed, reducing future growth.
How is the Social Security COLA calculated?
The SSA compares the average CPI-W for the third quarter (July, August, September) of the current year to the same period a year earlier.
If the CPI-W rises, the percentage increase (rounded appropriately) becomes the COLA.
If the CPI-W shows little growth, the resulting COLA will be small—or possibly zero.
Because it’s based on past inflation data, it lags behind current price changes.
What are experts projecting for a smaller Social Security COLA in 2026?
Many forecasts point to a smaller Social Security COLA in 2026 than in 2025. The COLA for 2025 was 2.5 percent.
Some analysts now project a 2026 COLA in the range of 2.1 percent to 2.8 percent, with a significant probability of being below 2.5 percent.
The Senior Citizens League, for instance, has predicted 2.1 percent. However, others forecast a moderate increase near 2.7–2.8 percent.
Given inflation trends and projected medical cost rises, many see the COLA being modest, likely lower than recent years.
What factors might reduce how much of the COLA you actually receive?
Even if the COLA is modest, your net gain could shrink further due to:
- Higher Medicare Part B premiums, which are deducted directly from Social Security checks. A sharp rise in premiums can erode part of the adjustment.
- Other health insurance or drug plan costs increase.
- Taxation of benefits—if your income is high, more of your benefits may be taxed.
- Offsets or overpayment recoveries that SSA may recapture, reducing what you see.
Hence, a small COLA increase might feel even smaller after these deductions.
What reform proposals would lead to systematically smaller Social Security COLAs?
Some proposals before Congress and in SSA forecasts would reduce future COLA increases across the board:
- Use of a chained CPI instead of CPI-W in computing COLA, which typically grows more slowly.
- A fixed reduction, such as subtracting one percentage point from each COLA (though not going below zero).
- Capping or limiting COLA growth for higher-income beneficiaries.
These changes would make COLA increases smaller long-term, beyond just 2026.
How would a smaller Social Security COLA affect beneficiaries?
A smaller Social Security COLA means slower benefit growth, which disproportionately affects those relying heavily on Social Security as their main income.
Over time, inflation may outpace benefit increases, reducing purchasing power.
For someone on a fixed budget, even a 0.5 percent smaller increase could mean hundreds of dollars over the years lost in real value.
It may force beneficiaries to cut expenses, draw more from savings, or work longer.
What can beneficiaries do to prepare for a smaller COLA?
To offset a possible smaller Social Security COLA, beneficiaries can:
- Review and adjust budgets for tighter increases.
- Delay claiming benefits if possible to earn delayed retirement credits.
- Supplement income through part-time work, savings, or other investments.
- Monitor Medicare premium changes and consider options to manage costs.
- Advocate or stay informed about legislative proposals affecting Social Security and COLA.
- Use my Social Security to review estimated benefit changes and prepare.
