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Suze Orman has a warning for anyone already spending next year’s Social Security raise.
“The expectation is that benefits will rise 3.6%,” she wrote in a Sept. 24 blog post. But “if you are also enrolled in Medicare, it is likely that a good portion of an increased 2027 Social Security benefit may be used to pay higher Medicare out-of-pocket costs.” (1)
I’ve been a CPA since 1981, and Suze is right to worry. I just think she’s pointing at the wrong target.
The Senior Citizens League estimates a 3.5% cost-of-living adjustment, which would lift the average $1,940 check by about $68 a month. (2)
Suze cites a projected Part B premium of $209.50, up $6.60 from 2026’s $202.90. (1)(3) That’s less than a tenth of the average raise.
The official COLA arrives Oct. 14, the same morning the government releases September’s inflation report. (4)
For most retirees, the Part B increase won’t be what eats the raise. Here are four things that can, and what to do about each one.
1. Your Part D or Medicare Advantage plan
Suze is right that drug coverage gets pricier. The Part D out-of-pocket cap rises from $2,100 in 2026 to $2,400 in 2027, and the maximum deductible rises from $615 to $700. (5)
Your plan’s premium can change, too, and no rule protects your Social Security check from that. Read the Annual Notice of Change your plan sent this fall, then compare plans during open enrollment, Oct. 15 to Dec. 7.
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2. An income surcharge that blindsides people
If your income crosses certain lines, you pay an income-related monthly adjustment amount, or IRMAA, on top of the standard Part B premium. (3)
In 2026, a single filer with modified adjusted gross income above $109,000, or a couple above $218,000, pays $284.10 a month for Part B instead of $202.90. The top tier is $689.90. (3) Part D has a surcharge of its own.
It works like a cliff. Go $1 over a line, and you owe that tier’s surcharge for the whole year.
And there’s a lag. Social Security based 2026 surcharges on 2024 tax returns. (6) So the Roth conversion or big IRA withdrawal you make this year can raise your Medicare bill in 2028.
Worse, the “hold harmless” rule that keeps a Part B increase from shrinking most people’s checks “does NOT apply to you if” you pay an IRMAA premium, Social Security says. (7)
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3. Taxes on your benefits
This is the bite almost nobody mentions. Up to 85% of your benefits can be taxed once your “combined income” tops $25,000 for single filers or $32,000 for couples. (8)
Combined income is your adjusted gross income, plus tax-exempt interest, plus half your Social Security. (8)
Those thresholds have never been raised for inflation. As Social Security’s own researchers put it, because they aren’t indexed, “the taxable proportion of aggregate benefit income has risen over time.” (9)
So every COLA quietly pushes a little more of your benefit into taxable territory. One fix: choose which accounts you draw from. Pulling from a Roth IRA or regular savings instead of a traditional IRA can keep combined income down.
4. Everything else you buy
The COLA is a raise in name only if your own costs rise faster. Prices overall were up 3.4% in the year through August, and gasoline was up 27.4%. (4)
Retirees spend differently than the workers whose prices drive the COLA formula, so your personal inflation rate can run higher or lower. Track your own bills, not the headline.
One fixed bill many retirees overpay, for example, is the phone. Big carriers spend billions on ads — and your bill pays for it. The same calls, texts and 5G coverage cost a fraction with Tello Mobile on T-Mobile’s reliable network — see plans from $10 a month.
Switching takes minutes, you keep your number, and there’s no contract. That’s up to $600 back in your pocket every year. Check out Tello.
The bottom line
Suze’s instinct is sound: Don’t spend the raise before you see what’s left of it. But for a typical retiree, the standard Part B increase takes only a small slice.
The bigger bites come from drug plans, income surcharges and taxes, and you can do something about all three before January.
A raise you never see isn’t a raise. It’s a pass-through. Find out where yours is headed now, while you can still change the route.
Sources: 1. Suze Orman; 2. The Senior Citizens League; 3. Centers for Medicare & Medicaid Services; 4. Bureau of Labor Statistics; 5. Medicare.gov; 6. Social Security Administration; 7. Social Security Administration; 8. Social Security Administration; 9. Social Security Administration Office of Policy
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