Social Security benefits are supposed to help seniors make ends meet. Unfortunately, for many retirees, the retirement checks from the government are not doing a very good job of providing the support they need.
In fact, a 2025 study released by the Senior Citizens League revealed that 21.8 million seniors are struggling to get by on Social Security alone, while two-thirds of all seniors surveyed said they were dissatisfied with the size of their monthly Social Security payment.
Sadly, things are likely to get worse next year, as a potential Social Security disaster is looming for unprepared retirees in 2026.
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Retirees are struggling, and they're about to take a big hit
Unfortunately, many retirees are in for an unpleasant surprise next year that could jeopardize their financial security. This surprise relates to the Social Security cost-of-living adjustment (COLA).
COLAs are supposed to help seniors keep pace with inflation, but retirees aren't convinced that this is actually happening. In fact, 94% of seniors responding to the Senior Citizens League's survey said that the 2.5% raise they got in 2025 was too low and that their benefits were not maintaining buying power, even though COLAs were designed to ensure they didn't lose ground.
For those seniors who had a hard time with the 2.5% raise, the 2026 COLA seems like an improvement at first glance. Retirees in the new year will get a 2.8% benefit increase, which is bigger than the raise announced in 2025.
The problem is, there's a big catch -- and it could end up throwing off the retirement planning efforts of those who assume they'll get more money next year.
Specifically, the catch is that Medicare premiums are going up by such a large amount, they'll eat up a good portion of the raise retirees collect.
This unpleasant surprise could be a disaster for retirees on a tight budget
Between 2024 and 2025, the standard premium for Medicare Part B increased by around $10.30, jumping from $174.70 in 2024 to $185 in 2025.
In 2026, however, Medicare premiums are going up by a lot more. The standard premium will increase from $185 to $202.90. That's a 9.7% increase and means retirees will pay $17.90 more per month next year.
If a senior is collecting $2,000 per month, which is fairly close to the average retiree benefit, their 2.8% raise of $56 per month will end up giving them only $38.10 in added benefits after the added Medicare premiums are deducted from the check (which typically happens automatically for those signed up for coverage).
This ends up, in practice, with retirees not getting close to seeing their checks actually go up anywhere near the promised 2.8%.
Medicare premiums affect the benefits bump retirees get because most seniors are enrolled in Medicare once they are age 65, and they usually have premiums withdrawn directly from Social Security checks. With $17.90 of the benefits increase disappearing before the bigger payments make it to retirees, it becomes a lot harder for those without a lot of 401(k) or IRA funds to make ends meet.
Many seniors already thought they were falling behind, according to the Senior Citizens League, with many reporting they felt inflation was "much higher" than the government's estimate.
They're likely right, too, as the formula used to calculate COLAs is based on how much prices increase on a basket of goods and services aimed at mirroring the spending habits of urban wage earners and clerical workers. Sadly, some areas where seniors spend a disproportionate amount of money, like healthcare and housing, aren't weighed as heavily in this index.
All of this means that retirees who don't realize the impact of Medicare premiums may be expecting a lot more money in their monthly Social Security check when it comes. And if they haven't already made plans to cut their budget or to cover their added costs from their IRA or 401(k) while still maintaining a safe withdrawal rate, they could face some serious financial issues in 2026 and beyond.
Retirees shouldn't wait for this to happen, as it's time to start planning now for what their finances will look like in the year ahead.
