Your Social Security will go up in 2027 — but so will this 1 key expense. Here’s how to protect your raise
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American retirees just got some news. Social Security recipients are on track for a substantial benefit increase in 2027, according to a new estimate from the AARP (1).
This news will likely be welcomed by the millions of retirees reliant on Social Security, especially the 67% of older Americans who get at least half their income (2) from the program.
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But most retirees won’t keep the full amount of their benefit increase. And some beneficiaries could even lose a huge portion of their raise.
Here’s why it’s not all good news.
AARP estimates a substantial Social Security benefits increase
On Sept. 11, the AARP forecasted that Social Security recipients would receive a 3.6% cost-of-living adjustment (COLA) in 2027. The projection was based on the most recent inflation trends.
COLAs are awarded most years to prevent the erosion of buying power due to inflation, and they are calculated by the Social Security Administration (SSA) using a set formula (3). The COLA calculation for the coming year is made using the current year’s third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The Bureau of Labor Statistics calculates the CPI-W based on the price of a basket of goods. If average costs measured in the third quarter increase year-over-year, Social Security benefits are increased by the same percentage, rounded to the nearest tenth of a percent.
The official COLA for 2027 won’t be announced this year until Oct. 14, when the SSA has data from July, August and September.
However, the AARP reviewed year-to-date CPI-W to reach its 3.6% estimate for 2027. This increase would make it larger than the 2.8% adjustment retirees received in 2026, and it would be the largest COLA since 2023, when retirees received an 8.7% increase (4).
Beneficiaries won’t keep the whole COLA — and the raise may not stretch far enough
While a 3.6% COLA is substantial, many retirees won’t see their Social Security payment increase by the full amount due to rising Medicare premiums.
Medicare Part B covers outpatient healthcare services, but retirees have to pay premiums. The monthly cost of coverage is the same for most retirees, but higher earners pay extra because of the income-related monthly adjustment amount (IRMAA (5)).
For retirees who file individual tax returns with a modified adjusted gross income below $109,000, the standard monthly premium for Medicare Part B is $202.90 in 2026 (6), up from $185 in 2025. That cost is expected to increase to $218.60 (7) in 2027.
The extra cost, it’s important to note, comes out of the COLA.
So, a retiree who was on track to get a $50 benefit bump will only bring home $34.30 each month in extra Social Security income.
For retirees with higher incomes, IRMAA also results in a premium surcharge — and that surcharge will increase as well. For instance, individuals who filed taxes with incomes between $109,001 and $137,000 paid $284.10 in monthly Medicare Part B premiums after IRMAA was applied in 2026, but they will pay around $306.00 in 2027.
The higher the income, the larger the surcharge. For single filers with incomes above $500,000, 2026 Medicare Part B monthly premiums totaled $689.90, while 2027 premiums are expected to be $743.20.
What’s more, these Medicare premium increases reduce a raise that’s already too small, as the COLA formula’s use of CPI-W to estimate benefit increases often results in an adjustment that doesn’t fully account for the inflation retirees experience.
In fact, Social Security benefits have lost an estimated 20% of buying power since 2010 (8), according to The Senior Citizens League.
How can retirees shore up their finances during a period of high inflation?
A large raise isn’t necessarily great news for retirees, because it can mean inflation is also very high.
Inflation generally tends to be a problem for retirees.
For instance, those who invested more conservatively and have savings outside Social Security may lose buying power if prices increase at a higher rate than the returns they earn. Rising Medicare premiums only worsen the financial impact.
That’s why retirees might want to consider preparing their finances to account for continued price increases, including for costlier healthcare coverage.
Fortunately, they do have plenty of options to shore up their financial situation. Here are a few ways you might get yourself ready.
Diversify your investments
A general rule of investing for retirees is that they probably don’t want to invest too much of their money in the stock market.
The reason is simple: At some point, they may have to make withdrawals during a market downturn, or even a crash, and potentially damage their long-term financial health. This is especially a concern if it happens early in retirement (9).
One way of trying to get around this problem is by diversifying into a broad mix of different assets, limiting risk even if inflation is running hot.
Going for gold
Gold has long been viewed as an excellent hedge against inflation, since precious metals have historically maintained their purchasing power during inflationary events or periods of currency weakness.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.
Keep diversifying
If you’re looking for other options, Willow Wealth also offers diversification by providing access to investments traditionally open only to sophisticated investors.
With minimum investments as low as $5,000, you can invest in private market opportunities spanning real estate, private equity, private credit, art and litigation finance.
Options include funds managed by big names like Goldman Sachs, Carlyle and StepStone, as well as individual investments. Over $6 billion has been invested by more than 500,000 members (10).
You can join them and put your money to work across a wider range of assets.
Just be aware that private investments can require long holding periods, carry higher fees and result in losses.
Take advantage of discounts
Investing helps grow your wealth, but when your budget is tight, you may also want to look for ways to reduce your spending.
That’s where AARP can help. Membership with AARP offers older Americans and retirees a wide variety of discounts on almost everything they need, from travel and prescriptions to dental plans, entertainment and insurance.
But the AARP goes beyond just offering money-saving perks. The organization has become one of the most trusted among retirees in part because it offers helpful guides to important financial decisions, such as exploring government benefits, maximizing Social Security or choosing the right Medicare plan.
Sign up with AARP today and get 25% off your first year.
Get some professional help
Finally, investors with portfolios of $250,000 or more may find it challenging to make nuanced financial decisions during turbulent economic times. Managing withdrawals, minimizing tax exposure and ensuring long-term sustainability often require greater coordination and strategic planning.
In these cases, working with a financial advisor can help reduce costly mistakes.
For instance, if you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio. From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
AARP (1), (4); Seniors League (2), (8); Social Security Administration (3), (5); Centers for Medicare & Medicaid Services (6); Medigap Advisors (7); Northwestern Mutual (9); Willow Wealth (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.