Social Security cost-of-living adjustments (COLAs) are helpful, but if you've been receiving benefits for a while, you probably know that COLAs aren't always enough. Your costs increase, too, and you must take this into account when budgeting for 2026.
The latest COLA estimate is 2.7%, which would add about $54 to the average monthly check. However, there are good odds that the following three things will raise your expenses by more than this next year.
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1. Medicare costs
The government hasn't yet announced the 2026 Medicare costs. But back in June, it estimated that the Part B premium for next year would come in at about $206.20. That's an increase of $21.20 over the current $185.00 premiums.
Some of your other Medicare costs, including deductibles, might also increase. You should get a notice from Medicare listing these changes once they're made public.
Fortunately, you don't have to worry about your Social Security checks shrinking because of these Medicare changes. If your COLA is less than your Medicare premium increase, you'll receive your current Social Security benefit in 2026.
2. Inflation
You may have already noticed that certain expenses, like groceries, have increased throughout 2025 as a result of inflation. This isn't likely to change as we head into 2026. It's difficult to say how much more this will cost you in 2026, as it's heavily dependent on where you live and what you buy. But it's a factor to be mindful of as you start building your budget for next year.
You can counteract some of the increased expenses due to inflation by shopping around, using coupons, or cutting back in some areas. If you have retirement savings of your own, you can also fall back on these to cover what Social Security doesn't.
3. Benefit taxes
Social Security benefit taxes still exist. The new senior tax deduction created by the "Big, Beautiful Bill" may reduce the amount that some seniors owe in the short term. But that'll be counteracted somewhat by your higher benefits next year.
Social Security benefit taxes are based on your provisional income, which is your adjusted gross income (AGI), plus any nontaxable interest and half your annual Social Security benefit. If you're a single adult with a provisional income greater than $25,000 or a married couple with a provisional income greater than $32,000, you will owe some taxes on your Social Security benefits for 2026.
You can ask the Social Security Administration to withhold a portion of your checks for taxes, or you can budget for these on your own. You may need an accountant's help. If you opt to have the Social Security Administration withhold funds, it will return any excess it withheld to you with your tax refund.
Sometimes, it's possible to reduce how much you owe in Social Security benefit taxes by cutting back spending or taking more withdrawals from a Roth IRA or 401(k). You fund these accounts with after-tax dollars, so you can take tax-free withdrawals from them in retirement. These won't count toward your provisional income.
Planning ahead for 2026
The Social Security Administration will announce the 2026 COLA on Oct. 24, 2025. It'll also send you a personalized COLA notice in December, giving your exact benefit amount for next year. Once you know this, you can start designing your 2026 budget.
Make a list of your monthly expenses and figure out how much you'll need to cover on your own. Then, choose a strategy that makes sense for you. This could involve relying more upon your personal savings, getting a part-time job, or applying for other government benefits. Put your plan into action right away in 2026 and revisit it after a month or two to make sure it's still working for you.
