Social Security retirement benefits are based on average wages during your working life, but your benefits don’t stay the same during your retirement. In fact, the amount of the benefit changes pretty much every year.
Benefits, of course, can’t just stay stagnant because prices do not stay the same. Inflation happens, and retirees have to be able to maintain their buying power, especially as a Gallup poll shows around 58% of retirees consider Social Security to be a “major” source of their retirement income.
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There are a couple of key factors that affect exactly how Social Security benefits can change on an annual basis.
Unfortunately, based on those factors, there could be a risk of a benefit cut for some seniors next year. Fortunately, however, there is a little-known rule that will prevent that from happening.
Here’s why retirees could risk benefits decreasing in 2026, along with the rule that can save seniors from this fate.
Why Social Security retirees are at risk of a benefit cut in 2026
To understand why Social Security retirees risk a cut to benefits next year, you’ll have to take a look at the two big factors that affect how benefits change over time. Those factors are:
- The Cost of Living Adjustment
- Medicare premiums
The Cost of Living Adjustment, or COLA, is built into Social Security to help protect buying power for retirees. Since prices go up, benefits have to go up, and the law allows for annual benefit increases based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Related: Social Security’s 2026 COLA will be good news for older Americans
CPI-W is created by the Bureau of Labor Statistics and tracks prices on a basket of goods and services over time. The average change to CPI-W is calculated for the third quarter of each year (July, August, and September), and retirees are given a Cost of Living Adjustment (aka a Social Security raise) on the basis of how CPI-W numbers changed.
Based on how the CPI-W numbers have been trending this year, including July’s number included in the calculation, it’s estimated that the COLA is going to be 2.7% next year. So, Social Security checks could, in theory, rise by 2.7%.
However, we can’t forget about Medicare premiums. And that’s where the problem comes in.
Rising Medicare premiums could risk a Social Security benefits cut – but this rule saves seniors
For most retirees, Medicare premiums come right out of Social Security checks. And those premiums are going up a lot. The 2025 Medicare Trustees’ annual report, which was released in June, shows a $21.50 per month premium increase is coming next year, raising premiums from $185.00 to $206.50.
This adds up to an 11.6% increase, and it is the biggest year-over-year increase in Part B premiums since 2022, when premium prices surged by 14.5%.
Related: Millions of Medicare beneficiaries could see major price shock
Unfortunately, depending on how the final COLA numbers shake out, Medicare premiums could eat up all of the Social Security raise retirees get. And, for those with lower retirement checks, the big premium increase could cause payments to go down if Medicare premiums exceeded the benefits increase.
Fortunately, that can’t happen, thanks to a little-known rule called the Hold Harmless provision.
This rule guarantees that even if Medicare costs rise faster than benefits do, seniors will not see their payments cut. Instead, their entire raise will simply disappear. Then, they will pay less than the full Medicare premium due for a while.
For those who are underpaying Medicare premiums, they will eventually catch up in later years when the amount of their raise is big enough that it allows them to go back to paying the full amount of premiums without suffering a benefit decrease.
The Hold Harmless provision doesn’t apply to people enrolling in Medicare for the first time in 2022, nor to those who pay an income-related monthly adjustment amount premium or who are also enrolled in Medicaid and have Medicare premiums paid by a state Medicaid agency.
More on retirement:
- Dave Ramsey offers urgent thoughts about Medicare
- Jean Chatzky shares major statement on Social Security
- Tony Robbins has blunt words on IRAs,401(k)s
Still, this rule will be important to some retirees in 2026 to stop a Social Security benefit cut, even if most people have probably never heard of it.
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