The first Social Security payments of 2026 are hitting bank accounts this month, carrying a 2.8% cost-of-living adjustment (COLA) that the Social Security Administration estimates will add about $56 per month to the average retirement benefit. It's the smallest COLA since the 1.3% increase in 2021, but for 75 million Americans who depend on these benefits, every dollar matters.

The question isn't just how much the check is going up—it's how much of that increase you'll actually get to keep after Medicare premiums, taxes, and other deductions take their cut.

The Headline Numbers

According to the Social Security Administration, the average retirement benefit will rise from $2,015 to $2,071 per month in 2026. For couples who both receive benefits, the combined increase averages about $92 per month.

For Supplemental Security Income (SSI) recipients, the maximum federal amount increases to $994 per month for individuals and $1,491 for couples.

"The 2.8% cost-of-living adjustment will begin with benefits payable to nearly 71 million Social Security beneficiaries in January 2026."

— Social Security Administration

The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures how prices have changed over the past year. After several years of elevated inflation, the 2.8% adjustment reflects a return to more typical price increases.

But Here's What Medicare Takes Back

For most retirees, the headline COLA doesn't reflect what actually hits their bank account. Medicare Part B premiums—which cover doctor visits, outpatient care, and some preventive services—are typically deducted directly from Social Security payments.

In 2026, the standard Part B premium is jumping to $202.90 per month, up $17.90 from $185.00 in 2025. That 9.7% increase is the second-highest in Medicare history.

Here's the math: the average retiree gets a $56 increase from the COLA but loses $17.90 to the Part B premium hike. The net increase is just $38.10 per month—about $1.27 per day.

Key Changes for 2026

Beyond the COLA itself, several other Social Security provisions are changing:

Higher earnings cap: The maximum amount of earnings subject to Social Security tax increases to $184,500 in 2026, up from $176,100 in 2025. Workers earning above that threshold will see slightly higher take-home pay on amounts above the cap.

Higher earnings limits for early retirees: If you're receiving benefits before full retirement age and still working, you can now earn up to $24,480 before benefits are reduced ($1 reduction for every $2 earned above the limit). For those reaching full retirement age in 2026, the limit is $65,160.

Work credits increase: To earn one work credit toward Social Security eligibility in 2026, you must have wages of $1,890 (up from $1,810 in 2025). Four credits—the maximum per year—requires $7,560 in earnings.

Full retirement age continues rising: For workers born in 1960 or later, full retirement age remains at 67. Those claiming early at 62 will receive permanently reduced benefits.

When Your Check Arrives

Social Security payments are distributed on a staggered schedule based on your birthday:

  • Birth date 1st-10th: Second Wednesday of each month
  • Birth date 11th-20th: Third Wednesday of each month
  • Birth date 21st-31st: Fourth Wednesday of each month

If you signed up for benefits before May 1997, you receive your payment on the 3rd of each month.

The first payments with the new 2026 COLA went out on January 3 for those on the legacy schedule, with staggered payments beginning January 8.

The Senior Tax Deduction

There's some good news on the tax front. A new $6,000 federal tax deduction for Americans 65 and older takes effect with the 2025 tax year (filed in early 2026). For seniors who pay taxes on their Social Security benefits, this deduction can provide meaningful relief.

Currently, up to 85% of Social Security benefits can be taxable depending on your combined income. The new deduction doesn't change that calculation, but it reduces your overall taxable income, potentially lowering the tax bite on your benefits.

Making Your COLA Work Harder

With such a modest net increase, retirees need to be strategic about their finances. Here are steps to maximize the impact:

  • Review your Medicare plan during open enrollment — You may find a lower-cost alternative that reduces your premium burden
  • Check for Extra Help eligibility — Low-income retirees may qualify for programs that reduce Medicare premiums and drug costs
  • Take advantage of the Part D $2,100 cap — If you have high drug costs, the out-of-pocket maximum can save thousands
  • Consider the timing of IRA distributions — Strategic withdrawals can help manage your Medicare IRMAA bracket
  • File for the senior deduction — Make sure your tax preparer applies the new $6,000 deduction if you're eligible

The Bigger Picture

The 2.8% COLA represents a return to more normal adjustments after several years of inflation-driven increases (8.7% in 2023, 3.2% in 2024). While lower inflation is generally positive for retirees' purchasing power, it also means smaller annual raises.

Social Security faces long-term funding challenges that Congress has yet to address. The program's trust fund is projected to be depleted in the early 2030s, which would trigger automatic benefit cuts of approximately 20% unless lawmakers act. While that timeline isn't imminent, it hangs over every COLA discussion.

The Bottom Line

The 2026 COLA gives 75 million Americans a modest boost that will help offset—but not fully keep pace with—rising costs. After Medicare takes its share, the average retiree will see about $38 more per month in their bank account.

It's not nothing, but it's not much either. For retirees counting on Social Security as their primary income source, every efficiency in spending and every tax break matters more than ever. The 2026 check may be slightly bigger, but making it stretch remains the ongoing challenge of retirement.