Retirement Social Security

Not Everyone Will Get the Full 3.6% Social Security Raise in 2027 - Here’s Why

These things could shrink your Social Security raise.

By Josh Koebert , Edited by Laura Hohenstein

Updated Nov. 14, 2026

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Social Security's 2027 cost-of-living adjustment (COLA) has been announced, and benefits for seniors are increasing by 3.6% next year. This adds about $75 a month to the average retired-worker payment, starting in January.

If you're planning next year's monthly budget, this may seem like good news. And it can be, assuming you put the increase into context with other rising costs. Here's how the increase works and what factors could keep the full increase from hitting your bank account.

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Smaller checks could lose larger shares

The COLA increases the gross benefit, or the amount you are paid before Medicare premiums and other deductions. Medicare Part B premiums usually go up each year, and the latest Medicare trustees' report projects that the standard premium will increase $6.60 next year, to $209.50. That amount is not yet final.

A beneficiary receiving $1,000 in monthly gross benefits would get a $36 gross increase at 3.6%, rather than the roughly $75 average. If the projected $6.60 Medicare Part B increase holds, it would take up a larger share of the $36 increase than of the $75 increase, leaving proportionally less of the COLA to spend.

And, yes, the hold harmless provision protects eligible beneficiaries against a lower payment after Part B premium increases, but this doesn't guarantee they get to keep all of their COLA.

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Standalone Part D enrollees may see even less COLA

If you use a standalone Medicare prescription drug plan, next year brings another change: The temporary Part D Premium Stabilization Demonstration ends after 2026. This support was intended to soften premium changes, and some plans could raise premiums without it. However, CMS projects that the average monthly premium for standalone plans will increase by less than $1 in 2027.

The number to watch isn't the national average or news headline, but rather your specific plan's 2027 premium compared with what you pay now. That tells you whether your premium will rise or fall, and how much any increase could cut into your COLA. A higher premium reduces your Social Security deposit if deducted from it directly; otherwise, it takes from your household budget.

Households near Social Security tax thresholds could owe more

Combined income is your adjusted gross income, tax-exempt interest, and half of your Social Security benefits added together. If this number exceeds $25,000 for an individual filer or $32,000 for a married couple filing jointly, up to 50% of Social Security benefits may become taxable. If it exceeds $34,000 or $44,000, respectively, up to 85% may become taxable.

To clarify, a higher tax liability doesn't automatically reduce the benefit payment, but if any of the three parts of combined income creep up, it could mean a bigger tax bill or withholding later on.

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Higher-income beneficiaries may see surcharges

Another consideration is the income-related monthly adjustment amount (IRMAA), which looks at your modified adjusted gross income (MAGI) from two years prior. Crossing a certain income tier can trigger this additional charge for Part B and Medicare prescription drug coverage for higher-income beneficiaries.

2027's COLA won't matter for this adjustment until 2029, but it may still be consequential. More expensive premiums can reduce your final Social Security benefit deposit, and those paying IRMAA aren't protected by the Medicare Part B hold-harmless provision.

Some tax withholdings rise with benefits

Social Security beneficiaries may choose to have 7%, 10%, 12%, or 22% of their monthly payment withheld to help offset taxes. Because it's a percentage of the benefit (and not a set dollar amount), the withheld amount increases if the total payment increases.

If COLA increases a benefit payment by $75 and the withholding rate stays at 10%, an additional $7.50 will be withheld. While this withholding is completely voluntary and is a prepayment of federal taxes, it can still put a temporary dent in the budget. You may get some or all of it back as a refund if your total tax payments exceed what you owe.

There's no reason for surprises

With so many factors at play, it can be hard to know just how big January's benefit payment will be. Fortunately, the Social Security Administration makes it very simple to log into your account and see what's happening before your payment arrives.

Those who create their account and enroll in paperless notices by November 18 can see their COLA increase online. Online COLA notices and 2027 Medicare premium information will be available in the Message Center starting in late November. This number tells you what will hit your bank account, but it may not factor in the cost of taxes later on.

Those who don't enroll in paperless statements will get their notices by mail.

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Bottom line

COLA will cause Social Security payments to increase 3.6% next year, but this is for gross benefits. If you have Medicare changes, income-related surcharges, or withholding to deal with, it can decrease your final take-home pay.

How can you make the right moves? Check your 2027 Medicare premiums as they become available, and review your COLA notice to see how much of the increase you'll get to add to the household budget. Avoid spending the increase before you get it, and wait until that first payment is in hand to be absolutely sure.

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