Social Security COLA and Medicare Part B: What to Expect for Your Wallet Next Year

If you rely on Social Security, keeping track of the annual Cost-of-Living Adjustment (COLA) is essential for planning your budget.

While a raise in your monthly check is always welcome news, rising healthcare premiums could swallow up a portion of that extra cash before it ever hits your bank account.

Current estimates from The Senior Citizens League project the upcoming COLA to land around 3.5% to 3.6%.

For a retiree receiving the average monthly benefit of roughly $2,086, a 3.5% bump adds about $73 per month to their check.

However, the final COLA figure isn't official yet, as the Social Security Administration calculates it using inflation data from July, August, and September (measured by the CPI-W) and typically announces the official rate in October.

The main reason your takeaway might be smaller than expected is Medicare Part B, which covers doctor visits and outpatient care and is usually deducted directly from Social Security checks.

According to projections in the annual Medicare Trustees Report, standard monthly Part B premiums are expected to rise from $202.90 to around $209.50, an increase of $6.60 per month.

Fortunately, most retirees are protected by the federal "hold harmless" provision, which prevents a rise in Medicare Part B premiums from reducing your net Social Security benefit below what it was the previous year.

If you earn a higher income, keep in mind that you may be subject to the Income-Related Monthly Adjustment Amount (IRMAA), which adds surcharges based on tax returns filed two years prior.

Additionally, the Medicare Trustees estimate that the annual Part B deductible could rise to $292, meaning out-of-pocket medical expenses could also shift.

With Medicare's Open Enrollment running from October 15 to December 7, autumn is the perfect time to review your Medicare Advantage and Part D coverage to make sure your overall health plan fits your financial needs.

While a COLA increase will boost your gross payout, keeping an eye on Medicare deductions will give you the truest picture of what you will actually have available to spend next year.

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Read more: Hitting $3,000 a Month in Social Security: What It Really Takes