Every fall, millions of retirees wait for one important number — Social Security’s annual cost-of-living adjustment (COLA). For seniors living on fixed incomes, COLAs are crucial because they can spell the difference between keeping up with rising bills and falling behind.
The problem is that a larger Social Security check doesn’t always translate into more money in retirees’ pockets. And a big reason boils down to rising Medicare costs.
Quick Read
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Rising Medicare Part B premiums jumped $18 in 2026 to $203/month, and another 2027 hike could wipe out seniors’ entire Social Security COLA.
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The ‘hold harmless’ provision stops benefits from dropping due to Medicare hikes, but seniors’ checks can still remain completely flat year-over-year.
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Returning to part-time work may deliver more meaningful income relief than any 2027 COLA after Medicare cost increases are factored in.
Medicare Part B could take a bigger bite out of benefits
Healthcare costs have consistently risen faster than general inflation in recent years. And Medicare premiums have followed that trend.
For dual enrollees, Medicare Part B premiums are typically deducted directly from Social Security benefits. When Part B premiums rise sharply, they can potentially eat up an entire COLA, leaving seniors with no raise whatsoever.
In 2026, the standard monthly Medicare Part B premium increased by $17.90, climbing from $185.00 to $202.90. That represented one of the largest dollar increases in recent years and immediately reduced the value of Social Security’s 2.8% COLA.
Early projections suggest another Part B increase is coming in 2027. And if it ends up being substantial and the upcoming COLA isn’t so generous, it’s conceivable that the additional cost of Part B could negate seniors’ next COLA.
Now the good news is that any Part B hike that comes down the pike can’t exceed the amount of that year’s COLA. Thanks to what’s known as the hold harmless provision, Social Security benefits cannot decrease from one year to the next due to Medicare increases.
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In other words, if there’s a COLA that results in a $19 Medicare Part B increase but the COLA only results in a $17 boost, that Social Security benefit cannot decrease by the $2 difference. In that case, that benefit would stay the same. But many seniors can’t afford to see their benefits remain flat given rising costs.
Careful budgeting is key
It’s too soon to know what 2027’s Social Security COLA will look like, or how much the cost of Medicare Part B will increase. But seniors may want to brace for rising costs and budget accordingly.
If you’re having trouble keeping up with your expenses, take a look at your spending now. Review every bill and credit card or bank statement to see where your money is going and start making adjustments to the best of your ability.
And in the course of planning your 2027 budget, expect Medicare to rise and eat away at a good chunk of your Social Security COLA. It may not wipe out your raise entirely, but you shouldn’t expect that COLA to make a meaningful difference in your finances.
In fact, if money has been tight, it could pay to go back to work in some capacity to give your income a boost. Working even a few hours each week might put more money in your pocket than any given Social Security COLA, even if there’s a decent net raise to enjoy in 2027 after accounting for rising Part B costs.
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One investment mistake could create big risks for your retirement. Many investors make the same critical errors: being too conservative, making big bets on “sure things,” or paying excessive fees. Any of those blunders can endanger your hard-earned savings.
Now you can learn the mistakes even experienced investors make (and ways you can sidestep them before it’s too late) with this new guide: 13 Retirement Mistakes and How to Avoid Them from Fisher Investments. (sponsor)
