Retirees will get a 2.8% inflation adjustment in their Social Security benefits next year. Is that enough to offset rising living costs and help older people maintain their standard of living?

The annual Social Security cost-of-living adjustment, or COLA, always grabs the headlines in the fall, but it’s just one of the changing numbers that will have an impact on retiree pocketbooks.

The inflation that affects older adults is more sensitive to healthcare costs compared with the younger, working population. This means that changes in Medicare costs are just as important as the COLA.

Heading into 2026, rising Medicare costs likely will consume a good chunk of the COLA. That underscores the importance of scrutinizing your Medicare coverage during the annual fall enrollment period to make sure you have the best fit coverage possible. The enrollment period is underway now and ends Dec. 7, so let’s “control what we can control,” as the saying goes.

The Social Security COLA

The 2.8% COLA will be added in January to the benefits of 75 million Americans. This group includes not only retirees and their spouses and survivors, but also those who receive disability benefits and supplemental security income, the benefit program for people with very low incomes.

For the average Social Security beneficiary this year, the 2.8% bump translates to a monthly increase of about $56. The maximum amount of earnings subject to the Social Security tax will rise to $184,500.

The COLA formula tracks the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which reflects price changes for a group of goods and services bought by working people. The COLA is calculated by indexing the numbers for July, August, and September—a formula spelled out in federal law. The COLA for 2026 is roughly in line with those awarded for the past two years, after two years of very large increases during and after the pandemic, when inflation rates were high.

Some advocates and policy experts have argued for a shift to an inflation measure that more closely tracks spending by older people. The federal government has long produced an “experimental” inflation measure called the CPI-E (E is for elderly). It often—but not always—runs a bit higher than the current CPI-W change in the formula.

For seniors who have trouble keeping up financially, the real culprit is medical costs, which are double what younger households spend. Healthcare spending accounted for 13.6% of total spending by households age 65 and older in 2022, according to KFF, a healthcare research nonprofit.

Let’s take a look at how those costs are shaping up for 2026.

Medicare Part B

The Part B premium, which covers outpatient services, is just one component of senior health spending. But it’s a closely watched number for many, because it typically is deducted from Social Security checks. That means the meaningful COLA number isn’t your gross increase, but how it nets out after Part B is deducted.

The Part B premium for 2026 hasn’t yet been announced, but the Medicare program’s trustees have projected that it will rise 11.6%, or $21.54, to $206.50 per month. If that forecast holds, the Part B increase alone will consume nearly half the COLA awarded to the average beneficiary. For those who receive less Social Security, the Part B increase could significantly reduce any boost they would receive from the adjustment.

The math here is straightforward: The dollar increase for Part B reduces the dollar amount of your COLA. The impact is lower for people with higher Social Security benefits; next year, the COLA for a retiree with a benefit of $3,500 per month will net out at 2.18%. At the other end of the spectrum, someone with a benefit of $1,000 nets out at just 0.65%. (Social Security will notify beneficiaries of their specific COLAs by mail and online starting in early December.)

Part B premium increases have been all over the map during this decade. Medicare projects the entire cost of the Part B program for the year, and the premium covers 25% of that figure. There was an outlier 14.5% hike announced for 2022 because of the expected high cost of covering Aduhelm, a new Alzheimer’s drug. Medicare ultimately decided not to cover the drug and gave back the increase the following year, lowering the premium by 3%. Increases announced for 2024 and 2025 were both around 5.9%.

Fall Enrollment

It’s always a good idea to do a Medicare coverage checkup during the fall enrollment period. If you are enrolled in traditional Medicare Part A (which covers hospitalizations) and Part B (outpatient visits) and have a supplemental Medigap policy, there’s no need to review that coverage. But review your Part D prescription drug coverage during the fall enrollment period. Your plan’s premium and cost-sharing could be changing, along with the rules on what drugs will be covered.

A coverage review is especially important this year. Insurance companies that offer Part D plans are adjusting to an important improvement to the program made under the Inflation Reduction Act of 2022. The law adds a cap on your out-of-pocket spending (like co-payments and deductibles) for covered drugs. In 2026, it will be $2,100. This is a critical added protection for those who take pricey drugs for conditions like cancer and multiple sclerosis. These people formerly found themselves on the hook for thousands of dollars in out-of-pocket costs when their drug plans stopped paying.

Concerned that shifting risk to insurance companies would result in much higher premiums, the Biden administration offered a subsidy to drug plans in return for limiting premium increases to $35 per month. Most plans participated. The Trump administration is continuing the “premium stabilization” program in 2026, but with a lower subsidy; participating plans next year can raise premiums as much as $50.

Increases of that size are not popping up across the board, according to research by KFF, although some of the most popular plans will charge higher premiums. Moreover, in some states, insurers are offering zero-premium plans that can be a good deal for people who don’t take expensive medications. They typically carry the highest allowed deductible ($615 next year), but they come with the same strong $2,100 out-of-pocket cap in case you need expensive drugs sometime during the plan year.

You’re probably wondering, why would insurers offer something this cheap? The answer: as a marketing come-on. Very few people bother to reshop their Part D coverage during fall enrollment, so plenty of people will stay on these low-cost plans even if premiums rise in later years. Even more important: Insurers love to cross-market their Medicare Advantage plans to Part D enrollees. These are privately offered all-in-one managed care alternatives to traditional Medicare. You can expect a deluge of those messages from your dirt-cheap Part D provider.

And don’t limit your review to premiums—it’s just as important to make sure your drugs are covered, whether there are any restrictions on those drugs, and to examine deductibles and other out-of-pocket costs.

If you are enrolled in Medicare Advantage, you can review and switch that coverage during fall enrollment. Start by reviewing your drug coverage. But also be on the lookout for changes to your plan’s list of in-network providers. You also can leave Advantage and enroll in traditional Medicare—but don’t do that without confirming that you will be able to buy Medigap supplemental coverage.

Shopping Guidance

Many Medicare enrollees rely on insurance brokers to help with plan selection. These folks can be very knowledgeable about their own plan offerings, but keep in mind that they don’t offer all the plan choices available in your region. And they have financial incentives to push Advantage plans; the insurance industry pays them higher commissions on Advantage plans than they do for stand-alone Part D or Medigap plans.

For a more holistic and balanced view of the market, contact your State Health Insurance Assistance Program. The program, which is free and funded by the federal and state governments, offers comprehensive and unbiased expert help with Medicare. The Medicare Rights Center offers a counseling hotline at 1-800-333-4114.

The government-run Medicare Plan Finder is a useful tool for comparing plans. But take the site’s star quality ratings with a grain of salt. The rating program is used to determine “bonus” payments to plans for quality improvements and to help consumers make informed decisions. But the ratings reflect how numerous regional plans grouped under one Medicare contract perform.

And be careful with the site’s Advantage provider directories. This is a new feature on the site, and experts say it’s not yet a reliable resource. Your best bet is to ask your doctors what Advantage plans they’re in for 2026.

Mark Miller is a freelance writer. The opinions expressed here are the author’s. Morningstar values diversity of thought and publishes a broad range of viewpoints.