Your Social Security Check Goes Up. Why You May Still Be Getting Poorer.
Written by Troy Sharpe CFP®, CPWA®, CTS®, Founder and CEO
Reviewed/Updated: October 2026
Social Security’s 2027 COLA Is 3.6%. Will Retirees Actually Have More Buying Power?
Social Security announced a 3.6% cost-of-living adjustment, or COLA, for 2027. But a 3.6% increase in your Social Security benefit does not necessarily mean your retirement spending power increases by the same amount.
In this video and transcript, Troy Sharpe, CEO of Oak Harvest Financial Group, explains why retirees may want to look beyond the headline COLA percentage. Medicare premiums, taxes, personal inflation, and other retirement expenses can affect how much of a Social Security increase ultimately translates into additional purchasing power.
The lesson is simple: there are three Social Security numbers worth watching. Your gross benefit is the headline, your benefit after automatic deductions affects cash flow, and what those remaining dollars can actually buy affects your lifestyle.
Who Is This For?
This discussion is designed for retirees and people approaching retirement who receive Social Security or expect Social Security to be part of their retirement income.
It may be particularly helpful for people trying to understand how Social Security COLAs interact with Medicare premiums, inflation, taxes, and retirement expenses. It also provides a framework for looking beyond annual Social Security announcements and evaluating what changes in income may mean for an overall retirement plan.
About Troy Sharpe
Troy Sharpe is the CEO of Oak Harvest Financial Group. Oak Harvest helps retirees and families approaching retirement better understand how different areas of their financial lives can work together, including retirement income, investments, taxes, Social Security, Medicare considerations, and long-term planning.
In this discussion, Troy focuses on the difference between receiving a larger Social Security check and actually having greater purchasing power in retirement.
Key Takeaways
- A Social Security COLA isn’t the same thing as an increase in purchasing power. If income and expenses rise at similar rates, a retiree may have a larger check without a comparable improvement in lifestyle.
- Medicare can affect how much of a Social Security increase reaches you. In the video, Troy uses 2026 as an example. Social Security increased 2.8%, while the standard Medicare Part B premium increased 9.7%. For the average retiree discussed in the video, the Social Security COLA represented about $56 more per month, while the amount remaining after standard Part B increased by about 2.1%.
- Not every part of Medicare moves at the same rate. Part B and Part D should not be treated as though they have one universal Medicare inflation rate. Part D premiums vary by plan.
- Your personal inflation may be different from the inflation measure used for Social Security. Social Security COLAs use CPI-W. Your actual retirement budget may be affected differently by healthcare, insurance, housing, property taxes, food, and other expenses.
- Social Security tax thresholds create another consideration. The federal income thresholds used to determine when Social Security benefits become taxable do not automatically rise alongside Social Security COLAs. That means the relationship between benefits, other income, and taxes can change over time.
- Watch three numbers, not one. Troy’s framework is to monitor your gross Social Security benefit, what remains after automatic deductions, and what those remaining dollars can actually buy after changes in expenses and taxes.
The Three Social Security Numbers to Watch
When your Social Security benefit increases, consider looking at the change through three different lenses:
1. Gross Social Security benefit: How much did the benefit itself increase?
2. Net benefit after automatic deductions: How much remains after deductions such as Medicare Part B?
3. Actual purchasing power: After considering your taxes and personal expenses, what can the remaining dollars actually buy?
The first number makes the headline. The second affects cash flow. The third may provide a better picture of how an annual Social Security adjustment affects your retirement lifestyle.
Full Transcript
Social Security’s 2027 COLA: Are You Really Better Off?
Social Security just announced a 3.6% cost of living adjustment for 2027. That sounds like a 3.6% raise. But before you count it that way, let’s look at what happened last year. In 2026, Social Security went up 2.8%, but the Standard Medicare Part B premium went up 9.7%.
For the average retiree, that cola meant about $56 more a month. After Standard Part B, the amount left from the average check grew only 2.1%. So the check got bigger, but if your cost of living rose with that same inflation benchmark, the money left after Part B actually bought you a little less. That’s the distinction I want you to see.
Why a Bigger Social Security Check May Not Mean More Buying Power
A cost of living adjustment isn’t designed to make you richer. It’s designed to help your social security keep up with inflation. If your check goes up 3% and the things you buy go up 3%, you didn’t get 3% richer. You mostly stood still.
And if some of your biggest expenses rise faster than the cola, you can fall behind even though the check itself is larger. Before we go on, if you want retirement income explained this way, not just the headline number, but what it actually means for you and your retirement, subscribe to the channel.
How Medicare Premiums Affect Your Social Security Check
Part B is the cleanest example because the premium is usually deducted directly from your social security check. In 2026, the standard Part B premium rose 9.7%, so almost 10%. But part D is different. Part D premiums vary by plan.
And the average standalone Part D premium was actually projected to fall in 2026, even though the standard deductible increased. So I wouldn’t tell you Medicare went up 9.7%, because that would be wrong. Different pieces move at different speeds, and your coverage may look nothing like the national average.
Your Personal Inflation vs. the Social Security COLA
Social Security uses CPIW to calculate the cola. Now that’s a national inflation measure. It isn’t a measure of your personal retirement budget. Maybe your housing costs barely move.
But your healthcare, insurance, property taxes, or food are taking a much bigger bite than they used to. Two retirees in different
➡️ Want to see how these decisions could play out with your numbers? Schedule a complimentary retirement planning visit with Oak Harvest. https://click2retire.com/4jNctGT
Frequently Asked Questions
What is the Social Security COLA for 2027?
The Social Security cost-of-living adjustment for 2027 is 3.6%, as discussed in this video.
Does a 3.6% Social Security COLA mean retirees are 3.6% richer?
No. A COLA is intended to help Social Security benefits keep pace with inflation. If a retiree’s expenses increase alongside their Social Security benefit, a larger check may not produce an equivalent increase in purchasing power.
Why can a Social Security check increase while purchasing power decreases?
Expenses do not necessarily increase at the same rate as Social Security. Medicare premiums, healthcare, insurance, property taxes, food, and other costs can move differently. Taxes may also affect the amount available for spending.
How does Medicare Part B affect Social Security benefits?
Medicare Part B premiums are commonly deducted directly from Social Security benefits. If the Part B premium increases faster than the Social Security COLA, it can absorb part of the increase in the gross Social Security benefit.
Did Medicare increase 9.7% in 2026?
It would not be accurate to say all of Medicare increased 9.7%. The standard Medicare Part B premium increased 9.7% in the example discussed in the video. Part D premiums vary by plan and can move differently.
What inflation measure is used to calculate Social Security COLAs?
Social Security uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, commonly called CPI-W, to calculate COLAs. CPI-W is a national inflation measure and does not represent any individual retiree’s personal spending pattern.
Why might my personal inflation be different from the Social Security COLA?
Every household spends money differently. A retiree whose healthcare, insurance, housing, property taxes, or food costs increase rapidly could experience a different change in purchasing power than someone whose largest expenses remain relatively stable.
Can a Social Security COLA cause more of my benefits to become taxable?
Potentially. As Troy explains in the video, the federal income thresholds used to determine taxation of Social Security benefits do not automatically increase with inflation. Over time, higher Social Security benefits combined with other income could affect how much of a retiree’s Social Security is subject to federal income tax.
What should retirees review when Social Security increases?
Troy suggests asking three questions each year: How much did my gross Social Security benefit increase? What changed in the premiums, deductions, and taxes connected to that income? And what happened to the expenses that make up my actual lifestyle?
Bottom Line
A larger Social Security check can be welcome, but the headline COLA percentage doesn’t tell the entire retirement income story.
Understanding the impact means looking at the full sequence: what Social Security pays, what comes out of the benefit, how taxes may interact with other income, and what the remaining dollars can actually purchase.
That broader view can provide greater visibility into retirement income and help retirees understand whether their spending power is changing, rather than focusing on one percentage in isolation.
Important: This material is provided for educational and informational purposes only and should not be construed as individualized investment, tax, or financial advice. Individual circumstances vary, and tax laws, Medicare costs, Social Security rules, and other factors may change.
