It’s all about the Cost-of-Living Adjustment (COLA). Social Security in the United States is adjusted according to the cost of living, and since this percentage has increased especially in the last year, beneficiaries will see a 2.7% increase in their income. However, this could be offset by the increase in Medicare Part B starting in 2026.
According to a report published in June, the monthly cost will increase from $185 to $206.50 in 2026. That means $21.50 more each month, equivalent to an increase of 11.6%. This is the largest increase since 2022, when it rose 14.5%. Therefore, the estimated 2.7% increase in the COLA would be automatically deducted for Medicare beneficiaries, who would see it reflected in their monthly checks.
“The earnings limit for workers who are younger than full retirement age will increase”
The Federal Reserve wants prices to rise by a maximum of 2% per year to maintain stability, but they are now rising more than that. The Social Security Administration will calculate the final adjustment based on the average inflation rate from July to September, so data from the coming months will be key to confirming the increase.
The official statement from the Government about the Cost-of-Living Adjustment to 2025 says: “The earnings limit for workers who are younger than full retirement age (see the Full Retirement Age Calculator) will increase to $23,400. (We deduct $1 from benefits for every $2 earned above $23,400.) The earnings limit for people who reach full retirement age in 2025 will increase to $62,160. (We deduct $1 from benefits for every $3 earned above $62,160 until the month the worker reaches full retirement age.)” and ends: “There is no earnings limit for workers who reach full retirement age or older throughout the year.”
COLA: To increase retirees’ payments
This will primarily affect those receiving lower Social Security payments. In May, 74.269 million people received Social Security benefits, with an average monthly payment of $1,860.64. This group includes retirees, people with disabilities, widows’ or survivors’ benefits, and those receiving Supplemental Security Income (SSI).
The cost-of-living index is important because, according to it, Social Security adjusts it each year. The goal? To increase retirees’ payments slightly so they can continue to enjoy the same lifestyle, without having to endure some basic needs due to rising prices. However, the increase could be offset by rising Medicare premiums, as we explained earlier.
Important: Certain life changes may affect your eligibility for benefits
According to data from independent Social Security and Medicare policy analyst Mary Johnson, if the COLA increases by 2.7% and Part B increases by $21.50, beneficiaries receiving about $800 or less would see no difference.
It should be remembered that in order to access the different state benefits, all personal, family and work information must be updated. “Certain life changes may affect your eligibility for benefits. It is important to tell us if you marry, divorce, or your spouse or ex-spouse dies. If you have a child or stepchild who gets benefits on your record and no longer lives with you, please let us know,” reads the official statement of COLA, and warns: “Be aware of scams through the mail, internet, telephone, or in person. You should be careful when someone asks for personal information like your Social Security number.”
