Millions of Social Security recipients, including nearly 2.5 million in Ohio, are anticipating the 2026 cost-of-living adjustment (COLA) announcement on October 15. However, forecasts suggest that a significant increase in Medicare Part B premiums could largely negate the expected benefit increase, creating a financial challenge for many retirees.
Key Takeaways
- The 2026 Social Security COLA is projected to be between 2.7% and 2.8%, marking the fifth consecutive year of increases above 2.5%.
- A forecasted 11% rise in Medicare Part B premiums to approximately $206.20 per month is expected to consume a large portion of the COLA for most beneficiaries.
- Nearly 2.5 million Ohio residents received Social Security benefits in 2023, and the state does not tax these payments.
- Despite annual adjustments, the purchasing power of Social Security benefits has declined by 20% since 2010, according to The Senior Citizens League.
Anticipation Builds for 2026 COLA Announcement
Each year, nearly 70 million Americans who receive Social Security benefits look forward to the annual cost-of-living adjustment. This increase is designed to help their fixed incomes keep pace with inflation. The official announcement for the 2026 COLA is scheduled for October 15, 2025.
Current projections indicate a notable, though not record-breaking, increase. Independent policy analyst Mary Johnson forecasts a 2.8% adjustment, while the nonpartisan advocacy group The Senior Citizens League (TSCL) predicts a slightly lower 2.7% increase.
If these estimates hold true, it would be the fifth year in a row that the COLA has exceeded 2.5%. This extended period of significant adjustments has not been seen since a ten-year stretch from 1988 to 1997.
What a 2.7% Increase Means for Beneficiaries
A 2.7% COLA would translate to a tangible, albeit modest, increase in monthly payments. For the average retired worker, this would mean an additional $54 per month. Similarly, individuals receiving disability or survivor benefits could expect an average increase of about $43 per month.
How the COLA is Calculated
Since 1975, the Social Security Administration has used the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine the annual COLA. This index measures inflation based on the spending habits of a specific demographic, which critics argue does not accurately reflect the expenses of retirees, who constitute the majority of Social Security recipients.
A Closer Look at the Impact in Ohio
The upcoming COLA will have a substantial economic effect in states like Ohio, which has a large population of beneficiaries. According to Social Security Administration data from 2023, Ohio is home to nearly 2.5 million Social Security recipients.
These beneficiaries received a combined total of $4.23 billion in payments each month. The largest group consists of retired workers, accounting for over 1.7 million people. Other recipients include disabled workers, spouses, children, and survivors.
Ohio Social Security Beneficiaries (2023)
- Retired Workers: 1,779,927
- Disabled Workers: 305,732
- Widows, Widowers, and Parents: 159,964
- Children: 147,123
- Spouses: 70,208
One significant advantage for Ohio residents is the state's tax policy. The Ohio Department of Taxation confirms that Social Security benefits are not subject to state income tax. This is not the case nationwide, as nine other states currently tax these benefits to varying degrees.
The Double Challenge Facing Retirees in 2026
While any increase is welcome, many beneficiaries may find their 2026 COLA effectively erased by two persistent financial pressures. This situation is often described as a "double whammy" for seniors on fixed incomes.
1. The Erosion of Purchasing Power
The first issue is the long-term decline in the real value of Social Security benefits. An analysis by The Senior Citizens League found that the purchasing power of a Social Security dollar has decreased by 20% between 2010 and 2024.
"The CPI-W generally does a poor job of accounting for the expenses that matter most to seniors," the TSCL has noted. The index tracks spending by urban workers, whose financial priorities for housing, healthcare, and transportation often differ significantly from those of retirees.
This discrepancy means that even when benefits are adjusted for inflation, they may not cover the rising costs of goods and services most crucial to older Americans, particularly healthcare and housing.
2. The Surge in Medicare Part B Premiums
The second, more immediate problem is the projected spike in Medicare Part B premiums. Part B covers outpatient services and is a mandatory expense for most retirees enrolled in both Social Security and Medicare. These premiums are typically deducted directly from their monthly Social Security checks.
The Medicare Trustees Report estimates that the standard Part B premium will jump to $206.20 per month in 2026. This represents an increase of over 11% from the previous year, a much steeper rise than the modest 5.9% increases seen in 2024 and 2025.
For an average retired worker receiving a $54 COLA, a premium increase of more than $20 would consume nearly half of their raise. This substantial deduction will significantly reduce the net benefit of the COLA for millions, leaving them with little extra cash to manage other rising costs.
Planning for a Financially Strained Year
The combination of insufficient inflation tracking and sharply rising healthcare costs presents a difficult financial landscape for Social Security recipients in 2026. The modest COLA, intended to provide relief, is likely to be absorbed by mandatory expenses before it can be used for daily necessities like food, gas, or utilities.
As the October 15 announcement approaches, beneficiaries are advised to prepare for a year where their net Social Security income may see very little growth. Understanding these dynamics is crucial for budgeting and financial planning in the coming year.
