Medicare Premiums Took Nearly a Third of Your 2026 Social Security Raise - Will 2027 Be Any Better?

On Oct. 14, the Social Security Administration (SSA) is scheduled to announce the size of the cost-of-living (COLA) adjustment for 2027.

However, it is possible that any increase retirees receive in their monthly payment is going to quickly disappear into higher Medicare premium costs.

That certainly was the case this year. Find out what happened in 2026 and what is likely for those who hope to keep more cash in their pocket during 2027.

What is the Social Security COLA?

Each year, the SSA looks at the inflation numbers and decides whether to give Social Security beneficiaries a cost-of-living adjustment.

The COLA is intended to help retirees stay one step ahead of inflation. In years where inflation is low, the COLA may be minimal. Or, there may be no COLA at all.

However, when prices rise rapidly, retirees count on a robust COLA.

As inflation has spiked in recent years, COLAs also have grown, reaching as high as 8.7% in 2022.

What happened in 2026?

In 2025, inflation was down from its multi-decade highs of recent years. That meant the 2026 COLA was a more modest 2.8%, which added roughly $56 to the average Social Security check.

However, the federal government typically deducts a retiree's Medicare Part B premium directly from their Social Security benefits. This year, the standard Part B premium jumped to $202.90, a rise of nearly 10%.

That higher premium quickly swallowed up about one-third of this year's COLA, making it even more difficult for many retirees to keep pace with prices that remain on the rise.

This was the third consecutive year that Part B premiums rose faster than the COLA, and the seventh time that has happened in the past 10 years, according to The Senior Citizens League.

How are things going to play out in 2027?

As seniors wait for the 2027 COLA announcement, many likely are bracing for a repeat of the past several years. But there is actually some potentially good news on the horizon.

Early estimates forecast the 2027 COLA to actually exceed the projected increase in Part B premiums.

Based on recent inflation data, The Senior Citizens League anticipates that next year's COLA is going to be 3.5%. If that happens, average benefit checks would jump by $67.90.

Meanwhile, a recent report from the Medicare Trustees forecast the standard Medicare Part B premium to rise by about 3.25%, an increase of $6.60 a month.

If these estimates pan out, it would mark the first time since 2023 that the COLA outstrips the rise in Part B premiums.

Why you should not yet bank on these numbers

Before you celebrate this news, it's important to remember that these are merely projections.

The official announcement regarding next year's Social Security COLA is planned for Oct. 14. We should learn more about the actual rise in Part B premiums sometime in the next couple of months.

So, while it is likely that good news is coming, it also makes sense to keep hopes in check for now.

How retirees should plan for next year's COLA

Regardless of what unfolds in the coming weeks, the key lesson is to understand that the headline COLA number the government announces often falls short of what actually lands in your bank.

When Medicare Part B premiums jump, some part of your COLA likely never shows up in your savings. Instead, the government automatically deducts some of this bump to cover your increased Part B costs.

So, plan your finances accordingly. It is probably better to underestimate how much of your COLA you are going to actually receive than to overestimate it.

A lesson for younger Americans

Millions of retirees count on Social Security to help make ends meet. The program was developed to act as a supplement to retirement savings.

The SSA notes that Social Security was never intended to serve as a retiree's sole source of retirement income. Yet, today nearly 40% of Americans say their benefits provide all of their income, according to a study by the National Institute on Retirement Security.

That means countless retirees are simply left at the mercy of factors beyond their control.

Younger workers should learn from this mistake and start saving for retirement early and often in their careers.

Those who build a solid nest egg sail into retirement secure in the knowledge that they are financially secure no matter what happens to Social Security payments and Medicare costs.

Bottom line

Both the 2027 Social Security COLA and next year's increase in Medicare Part B premiums are officially on the way this fall.

While you wait, make sure you are preparing for this year's Medicare open enrollment period, which runs from Oct. 15 to Dec. 7. And take a second look at your budget so you enter 2027 in a position to stretch your retirement dollars further in the coming year.

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