The Social Security Surprise That’s Hitting Retirees After Year One

Many retirees often see their first Social Security deposits arrive right on target. Then, about a year later, the amount landing in their bank account can slip lower, even though their official benefit did not change.

The difference usually comes from Medicare premiums and, in some cases, tax withholding that begin or adjust after benefits start. Knowing how and when those deductions show up is key if you're trying to maximize your senior benefits without surprises.

Here's what causes the second-year shift and how it affects your monthly check.

The Part B deduction can reduce your deposit

For most retirees, the biggest change comes from Medicare Part B. Once you are enrolled, the monthly premium is usually taken straight out of your Social Security payment, which lowers the amount deposited into your bank account.

In 2026, the standard Part B premium is $202.90 per month, and the deduction typically begins as soon as coverage becomes active.

Note that Social Security benefits and Medicare enrollment do not always start at the same time. Some retirees begin collecting Social Security before 65 and enroll in Part B later. Others sign up for Medicare first and only see the deduction once everything is processed.

During that transition, early deposits can look higher than what eventually becomes the normal amount.

Drug coverage costs can reduce your payment

Medicare Part D can also affect your Social Security deposit, though the impact isn't always as obvious as Part B. Unlike Part B, Part D doesn't have a single standard premium. The amount you pay depends on the plan you choose.

Many retirees pay their Part D premium directly to the insurer, but some choose to have it deducted from their Social Security payment. When that happens, the deduction shows up the same way Part B does, as a smaller deposit rather than a separate bill.

Because Part D premiums vary and the deduction is optional, the change can be easy to overlook. A benefit amount that looks unchanged on paper can still produce a lower net deposit once a Part D premium begins coming out automatically.

Higher-income retirees face added deductions

Income-related surcharges, known as IRMAA, can also change a retiree's Social Security deposit after the first year. These surcharges increase Medicare Part B premiums and add an extra monthly amount tied to Part D.

The timing is what often catches people off guard. Medicare generally bases IRMAA on tax returns from two years earlier, so income earned before or around retirement can lead to higher Medicare costs later, even if current income is lower.

In 2026, IRMAA begins above $109,000 for single filers and $218,000 for married couples filing jointly. When it applies, the Part B premium increases in steps and can rise well above the standard amount.

Part D can also include an additional IRMAA charge, which Medicare may collect by reducing your Social Security payment or by billing you directly.

That delay makes the change feel sudden. A retiree may notice a smaller deposit and struggle to connect it to income from a few years back, even though that earlier tax return is what's driving the higher Medicare costs now.

Additional income increases taxes on benefits

Taxes are another reason a Social Security check can feel smaller after the first year, especially once retirement income starts coming from more than one place. Many retirees assume Social Security won't be taxed, but that depends on how much total income shows up on the return.

The IRS uses a measure called combined income, which includes your adjusted gross income (AGI), any nontaxable interest, and half of your Social Security benefits. If that combined income stays below certain thresholds, your benefits aren't taxed. Once it rises above them, a portion of your benefits can become taxable.

For single filers, combined income under $25,000 generally means Social Security benefits aren't taxed. Above $25,000, up to 50% of benefits may be taxable, and above $34,000, up to 85% may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.

Importantly, taxes aren't actually withheld from the monthly benefit unless you specifically ask for withholding. Many retirees see the full deposit during the year, then discover at tax time that a portion is owed to the IRS. This unexpected tax bite is another reason your second-year "take-home" from Social Security can be lower than your face benefit.

Bottom line

A smaller Social Security deposit after the first year usually comes down to deductions that start showing up more consistently over time. Medicare premiums are often the biggest piece, income-based surcharges can arrive later than people expect, and taxes can be easy to miss until the year is over.

Knowing the difference between your benefit amount and the money that actually hits your account helps make sense of the change. When those deductions are part of your retirement plan, the shift feels less like a surprise and more like standard deductions you can track each month.

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