Social Security Checks Are on Track for a $73 Raise in 2027 and Medicare’s Premium Hike Could Take a Big Bite Out of It
Retirees counting on next year's Social Security raise to ease their budgets may want to check one number before celebrating, because a separate annual cost adjustment has a habit of quietly swallowing a big portion of any gains.
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Social Security’s cost-of-living adjustment (COLA) announcement is the most important day of the year for many retirees. For those who get most or all of their retirement income from Social Security, any raise that arrives is crucial.
Current estimates are calling for a fairly substantial COLA in 2027. But it’s important not to get too hung up on that number for one big reason.
Medicare Part B hikes could erode next year’s raise
It’s important to understand that until the Social Security Administration makes the 2027 COLA official, any number you see now is merely an estimate. However, it’s an estimate based on inflation readings, so it’s hardly a guess in the dark.
Following July’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), independent Social Security analyst Mary Johnson updated her 2027 COLA projection to 3.4%. The Senior Citizens League has a similar, albeit slightly higher estimate at 3.6%.
If we take the average between the two projections above, it means Social Security benefits could increase 3.5% in 2027. And when we apply that raise to the average monthly benefit of $2,086 today, it’s a roughly $73 boost.
That would be a nice lift for the typical Social Security recipient. But unfortunately, many seniors could lose out on a chunk of their upcoming COLA due to rising Medicare Part B costs.
Seniors who are signed up for both Social Security and Medicare have to pay for Part B, which covers outpatient services, out of their monthly benefits. If the cost of Part B rises substantially, seniors will have less of a net COLA to enjoy.
In 2026, the cost of Medicare Part B rose almost $18 compared to 2025. If there’s a similar increase next year, it could leave the average Social Security recipient with a boost of $55 instead of $73 based on the projections above.
That’s still a nice increase. But a $55 boost doesn’t have quite the same ring as a $73 raise.
More information needs to come in on next year’s COLA
Before you start making financial plans for the new year, recognize that there’s little sense in doing so until you have two key pieces of information — an official COLA and the standard Part B premium. Both of these details should become available in the fall, and the COLA is likely to get announced first based on what’s happened in previous years.
Of course, if the CPI-W shifts a lot in August and September, next year’s COLA could come in higher or lower than 3.4% to 3.6%, which changes the math significantly. The more generous next year’s COLA is, the more likely seniors are to be left with a decent amount of money after a Part B hike is applied.
It’s also worth noting that next year’s Part B increase may not be as substantial as it was in 2026. But even a small hike could hurt seniors who are hoping for a large COLA in the new year to help them keep up with the rising costs they’ve been grappling with all year.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
