The letter arrived on a Tuesday. Plain white envelope, return address from the Social Security Administration in Baltimore. I had been dreading this moment ever since the rumors started circulating about the 2026 cost-of-living adjustment being one of the smallest in years.
I tore it open standing right there at the mailbox. The number staring back at me was $1,892 per month. That is a $23 increase from my 2025 benefit of $1,869. Twenty-three dollars. That is a 1.2% COLA — the lowest adjustment since the zero-percent increase in 2016.
How the COLA Calculation Actually Works
Most people think the government just picks a number. They do not. The Social Security COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. The SSA compares the average CPI-W from the third quarter of the current year to the same period the previous year.
For 2026, the third-quarter CPI-W numbers showed inflation had cooled significantly from the 3.2% we saw in 2024. Energy prices dropped, food inflation slowed, and housing costs — while still high — were not climbing as fast. The result was that 1.2% adjustment that showed up in my letter.
But here is what that number does not account for: my Medicare Part B premium also changed. My Part B premium went up by $11.50 per month, from $185 to $196.50. So my actual net increase in take-home Social Security? Just $11.50 per month. That works out to roughly 38 cents a day.
What $11.50 Per Month Actually Means for My Budget
I sat down with my monthly budget spreadsheet — yes, I am one of those people who tracks every dollar — and tried to figure out where that $11.50 would go. Here is what my fixed expenses look like in 2026:
- Medicare Part B: $196.50 (up $11.50)
- Medigap Plan G: $247 (up $18 from last year)
- Part D prescription plan: $34.70 (up $3.20)
- Groceries: roughly $380 per month for one person
- Electric bill: averaging $127 in my part of Florida
- Car insurance: $89 per month after shopping around
- Property taxes (escrowed): $312 per month
My Medigap premium alone increased more than my entire COLA. The $18 Medigap increase plus the $11.50 Part B increase means my healthcare costs went up by $29.50, while my Social Security only went up by $23. I am actually losing $6.50 per month in purchasing power compared to last year.
The Medicare Part B Trap Nobody Talks About
There is a provision called the hold-harmless rule that prevents your Social Security check from going down due to Medicare Part B increases. But it works in a way that most people misunderstand. If the Part B increase would reduce your net Social Security payment below the previous year, the Part B increase is limited to the amount of the COLA.
In my case, my $23 COLA was large enough to cover the $11.50 Part B increase, so the hold-harmless rule did not kick in. But I know people whose COLA was even smaller because they are in a different benefit bracket, and their Part B increase was fully absorbed by the COLA. Their net check stayed exactly the same as 2025 — zero additional dollars.
What My Financial Advisor Suggested
I called my advisor at the local SHIP office — that is the State Health Insurance Assistance Program, and it is free counseling for Medicare beneficiaries. She suggested three things:
- Shop Medigap during open enrollment — I could potentially save $30-50 per month by switching from Plan G to Plan N, which has lower premiums but requires copays for some office visits. For someone like me who only sees the doctor 3-4 times a year, the math works out.
- Review Part D plans on Medicare.gov — My prescription costs changed, and the plan that was cheapest in 2025 might not be cheapest now. She found a plan that would save me $8.40 per month on my two maintenance medications.
- Apply for Extra Help (LIS) — If your income is below certain thresholds, you may qualify for the Low-Income Subsidy that can dramatically reduce Part D costs. I do not qualify, but she said many people who do are not aware of the program.
The Bigger Picture Nobody Wants to Discuss
I have been collecting Social Security for nine years now. In that time, I have watched the purchasing power of my benefit erode steadily. The COLA is supposed to keep pace with inflation, but it uses a measurement — CPI-W — that tracks spending patterns of working urban consumers, not retirees.
Retirees spend proportionally more on healthcare and housing, both of which have consistently outpaced general inflation. The Bureau of Labor Statistics actually tracks a separate index called CPI-E (for elderly), which typically runs 0.2 to 0.3 percentage points higher than CPI-W. If Social Security used CPI-E instead, my 2026 COLA would have been closer to 1.5%, giving me an extra $5-6 per month.
That might not sound like much, but compounded over a decade of retirement, it adds up to thousands of dollars in lost purchasing power.
What I Am Doing About It
I cannot change federal policy, but I can control my response. Here is my plan for absorbing the 2026 COLA shortfall:
- Switching Medigap plans during the next open enrollment period — projected savings of $35 per month
- Changing Part D plans based on my SHIP counselor’s recommendation — saving $8.40 per month
- Picking up a part-time gig — I started driving for a grocery delivery service two mornings a week, which brings in about $200 per month before gas
- Reducing my electric bill — I invested $180 in blackout curtains and a smart thermostat, which my neighbor says cut his bill by 15%
None of these are revolutionary ideas. But together, they should more than offset the gap between my COLA increase and my actual cost increases. The $23 monthly COLA might be disappointing, but I refuse to let it define my financial year.
This is a personal account of one retiree’s experience with the 2026 COLA adjustment. Everyone’s situation is different. For personalized guidance, contact your local SHIP office at 1-800-633-4227 or visit shiptacenter.org.

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