On October 14, the Social Security Administration will announce next year’s cost-of-living adjustment, and the headlines will write themselves: Retirees Get a Raise.
It’s a number millions of people wait for all year. And it matters. When groceries, utilities and insurance cost more every year, a bigger check is welcome news.
But here’s what the headlines rarely tell you: the COLA you hear about on the news is not the raise that lands in your bank account. Before that money reaches you, it passes through three filters: Medicare, taxes and something called IRMAA. Depending on your situation, those filters can take a surprisingly large bite.
Let’s walk through what the 2027 COLA really means for you, and what you can do about it.
What’s expected for 2027
The COLA is Social Security’s annual inflation adjustment. It’s based on how much prices rose from July through September compared with the same months last year. The official number comes out October 14, and it takes effect with the payment you receive in January 2027.
Current forecasts put it somewhere between 3.2% and 3.6%, noticeably higher than the 2.8% retirees received for 2026. On an average monthly benefit of about $2,086, a 3.6% increase works out to roughly $75 more a month.
That’s the gross raise. Now let’s look at what comes out of it.
Filter #1: Medicare takes the first bite
If you’re enrolled in Medicare Part B, your premium is usually deducted straight from your Social Security check. So when the premium goes up, part of your COLA disappears before you ever see it.
The Medicare trustees project the standard Part B premium will rise from $202.90 a month in 2026 to about $209.50 in 2027. That’s roughly $6.60 a month, taken right off the top of your raise. The official 2027 premium will be announced in November.
The good news: that’s a smaller jump than last year, when the premium climbed nearly $18. The less-good news: the trustees expect premiums to keep rising faster than that in the years ahead.
Filter #2: The tax on your Social Security
Many retirees are surprised to learn their Social Security can be taxed at all. Whether it is depends on what the IRS calls your provisional income: your other income, plus any tax exempt interest, plus half of your Social Security.
- Single filers: above $25,000, up to 50% of benefits can be taxable. Above $34,000, up to 85%.
- Married filing jointly: above $32,000, up to 50% can be taxable. Above $44,000, up to 85%.
Here’s the part almost nobody talks about. Those thresholds have never been adjusted for inflation. They were set decades ago and haven’t moved since. Your benefits rise with inflation every year, but the tax lines stay put.
That means every COLA quietly pushes more retirees, and more of each retiree’s benefit, into taxable territory. A raise designed to help you keep up with inflation can end up increasing your tax bill.
State taxes are a separate question. Connecticut exempts Social Security for many residents below certain income levels, but higher-income households can still owe state tax on part of their benefits.
Filter #3: IRMAA, the surcharge with a two-year memory
If your income is higher, Medicare adds a surcharge to your Part B and Part D premiums. It’s called IRMAA, the Income-Related Monthly Adjustment Amount, and it can add hundreds of dollars a month for a married couple.
The tricky part is timing. Your 2027 Medicare premiums are based on your 2025 tax return. A one-time event two years ago, like a large IRA withdrawal, a Roth conversion or the sale of a property, can raise your premiums today, long after you’ve forgotten about it.
IRMAA works in brackets, so going even $1 over a threshold can trigger the full surcharge for that tier. A retiree who sits just below a line can see a COLA, plus a little extra income, push them over the edge.
The official 2027 IRMAA brackets will be released in November.
How to keep more of your raise
You can’t control the COLA. You can’t control Medicare premiums. But you have more control over the other filters than most people realize, because they all depend on how and when your income shows up.
- Know your numbers before December. Look at your projected 2026 income now, while there’s still time to make changes before the tax year closes.
- Plan your withdrawals, not just your investments. Which account you draw from (traditional IRA, Roth, taxable brokerage or cash) can change how much of your Social Security is taxed.
- Watch the IRMAA lines. If you’re close to a bracket, a small adjustment in timing can save you a full year of surcharges.
- Use Roth conversions strategically. Converting in lower-income years can shrink future required minimum distributions and the taxes and surcharges that come with them. Done carelessly, a conversion can trigger IRMAA. Done with a plan, it can protect you from it for years.
- Don’t miss the new senior deduction. For tax years 2025 through 2028, people 65 and older may qualify for an additional deduction of up to $6,000 each, which phases out at higher incomes. It doesn’t eliminate tax on Social Security, but it can meaningfully reduce your taxable income.
- Think in years, not just this year. The right move for 2026 depends on what 2027, 2028 and your RMD years look like. That’s what a multi-year tax plan is for.
The bottom line
A COLA is good news. But it’s only half the story. What matters isn’t the size of the raise on the news. It’s how much of it you actually get to keep.
At Strategies for Wealth Management, tax-smart retirement planning is what we do every day. We’ll look at your Social Security, your Medicare costs and your tax picture together, so a raise actually feels like a raise.
Curious what the 2027 COLA will really mean for you? Contact any of our Connecticut offices in Shelton, Southington, Southbury, Rocky Hill, or Guilford OR call us at (866) 701-ROCK (7625) to schedule a conversation. Bring your questions. We’ll bring the plan.
Important information: COLA and Medicare figures in this article are projections as of October 6, 2026 and may differ from official amounts announced by the Social Security Administration and the Centers for Medicare & Medicaid Services. This article is for educational purposes only and is not tax, legal or investment advice. Please consult a qualified professional about your specific situation. Investment advisory services are offered through Stone Wall Money Management, LLC, a Connecticut-registered investment adviser. Insurance products and services are offered through Strategies for Retirement, LLC.