Inflation Is Picking Up. Here’s What It Means for Retirees.

Premiums for Medicare Part B are automatically deducted from the benefit checks of Social Security recipients who are enrolled in Part B. (Stefani Reynolds/Bloomberg)

Social Security recipients will get a projected 2.7% raise next year as inflation heats up, but a larger-than-average rise in Medicare Part B premiums may erode that boost for many older adults.

Price increases from President Donald Trump’s tariffs have started to make their way into the economy, pushing the consumer price index for June up 2.7% over the past year. The cost-of-living adjustment to Social Security benefits is based on a subset of the headline consumer price index called CPI-W, which rose 2.6% over the past year.

Based on the latest data, the nation’s roughly 67 million Social Security recipients could see a 2.7% raise next year, according to projections by Mary Johnson, an independent Social Security and Medicare policy analyst. The Social Security Administration is expected to announce the actual COLA for 2026 in October, once the third-quarter inflation data are complete.

Medicare Part B premiums are automatically deducted from monthly benefit checks for Social Security recipients who are enrolled in Part B. The standard Part B premium is forecast to rise to $206.20 next year, from $185 this year, according to the annual Social Security and Medicare Trustees report released last month. Higher earners pay more, while low-income seniors may qualify for programs that eliminate most of their costs.

The projected 11.5% increase in Part B premiums from 2025 to 2026 compares with the average annual increase of 5% over the past 21 years, according to Johnson’s calculations. The average COLA increase for that period is 2.6%, she said.

The projected Part B premium jump of $21.20 would consume the entire COLA of Social Security beneficiaries who receive a monthly benefit of around $800 or less, unless they are in a low-income program that eliminates their premium. Republicans’ One Big Beautiful Bill Act paused implementation of a program that would help very low-income seniors enroll in programs to reduce their Medicare costs.

Across all income levels, healthcare costs are an important consideration in retirement. “Your healthcare takes a growing portion of your income every year, and you need to plan for that,” Johnson said.

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com