Social Security just announced a 3.6% cost-of-living adjustment (COLA) for 2027, the biggest since the 8.7% bump in December 2022 (SSA COLA history). For the average retired worker, that moves the monthly check from $2,095 to $2,170 (SSA fact sheet). Seventy-five bucks a month. Before you spend it, let’s see how much of it might already be spoken for.
First up, Medicare Part B, which comes out of most checks before you see a dime. The 2026 Medicare Trustees Report projects the standard premium rising from $202.90 to about $209.50 in 2027 (https://www.cms.gov/oact/tr/2026). That’s $6.60 a month, so about $68 of your $75 survives. Mild this year, and still a projection until CMS confirms it in November. The pattern is the real issue. Last year the premium jumped from $185.00 to $202.90, nearly 10%, against a 2.8% COLA, and the Trustees project increases of roughly 6% a year through 2031 while COLAs are assumed to average 2.4% (summarized by AARP).
Then there’s everything else. A COLA is a rearview mirror, or a catch-up payment for price increases you’ve already been paying. And your personal inflation rate depends on your basket. Over the 12 months ending in September, BLS reports gasoline up 34.2%, airline fares up 22.4%, and groceries up 1.8% (https://www.bls.gov/news.release/cpi.nr0.htm). If you’re not leaving the house and eating in everyday, you’re probably doing okay. But if you’re driving around or flying around the country to visit family, those parts of your “basket” are quickly eating away at your COLA. A $100/month gas bill increasing to $134/month and a $400 flight now costing $488, and you can see how that extra $68/month from Social Security vanishes quickly. Plug in your own numbers, but you get the idea. So, treat the headline as a starting point. Budget starting from your net deposit, and track your own activities and prices. If you’re still a few years out, start building the gap in now. A raise that only keeps pace with prices is less a raise and more like a treadmill upgrade.
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