Suze Orman: The Social Security and Medicare trap of 2026 has arrived

It’s February 2026, and retired Americans who are counting on Social Security’s new 2.8% cost of living adjustment (COLA) to give them some financial breathing room have some tough math to do.

“Based on the increase in Consumer price index (CPI-W) From the third quarter of 2024 through the third quarter of 2025, Social Security beneficiaries and Supplemental Security Income (SSI) beneficiaries will receive 2.8 percent Cola for 2026″ Explaining the Social Security Administration (SSA).

But the best-selling personal finance author and two-time Emmy Award-winning television host Suze Orman Another new fiscal consideration for 2026 eats into the Social Security boost, he says.

“Almost everyone enrolled in Medicare pays a monthly premium for Part B coverage, which helps pay for doctor visits, lab tests and other out-of-hospital care.” Orman wrote.

RELATED: AARP sounds alarm over major Social Security problem

Medicare Part B is now significantly more expensive in 2026.

“Each year, Medicare Part B premiums, deductibles, and coinsurance rates are set by provisions Social Security Law“,” Written by the Centers for Medicare & Medicaid Services. “The standard monthly premium for Medicare Part B enrollees will be $202.90 For the year 2026, an increase of $17.90 from $185.00 In 2025.”

Orman has a word of caution for Americans about that 9.7% He increases.

“Even if you haven’t signed up for Medicare yet, I need you to listen.” I wrote. “Part B is a major expense that you need to work into your financial planning for retirement.”

Rising Medicare Part B premiums affect Social Security’s COLA rise

My years of experience reporting on personal finance news have forced me to do some math.

I conducted a quick independent analysis of The Street On how Change Social Security’s COLA along with Increased Medicare Part B premiums It affects retirees in 2026 and found the following:

• Low Social Security benefits ($1,200 per month): A 2.8% The COLA amendment adds to Social Security $33.60. after $17.90 Increased Medicare, and the retiree ends up with just $15.70 In actual additional income, this means that more than half of the COLA is effectively wiped out.
• decent Social security Benefit ($1600 per month): the 2.8% Provides a boost $44.80. Once the higher medical insurance premium is deducted, the true monthly gain falls to $26.90.
• Average retiree Social security Benefit ($2,071 per month): It produces approximately the standard utility level $58.00 Total increase. After accounting for the Medicare jump, the usable monthly increase decreases to $40.10.
• Above average Social security Benefit ($2800 per month): A 2.8% Lift produces $78.40. Subtracting the Medicare hike leaves a net improvement $60.50 per month.
• High Social security Benefit ($3,800 per month): Cola adds $106.40. After deducting Medicare, the retiree keeps… $88.50 In real monthly gains.

As the numbers clearly show, I find that Medicare premium increases negatively impact beneficiaries with lower Social Security benefits as a percentage of Social Security’s COLA they earn significantly more than those receiving higher monthly salaries.

Suze Orman explains how to calculate Social Security’s COLA

Orman took some time to explain how the 2.8% increase in COLA was determined.

“I know this seems low given that utility costs for many households rose more than 5% in the past year, food rose more than 3% on average, and rents rose more than 3% on average as well.” I wrote.

“Why did you disconnect?” Orman asked. “Well, the main reason is the time frame that Social Security uses: Benefits are calculated from the third quarter (end of September) of one year to the third quarter of the following year. And 2.8% is where things fall in that time frame.”

More about personal finance:

• Zillow expects significant change in mortgages in the US housing market
• AARP sounds the alarm on Social Security’s biggest problem
• Dave Ramsey bluntly warns Americans about 401(k)s.

AARP, an advocacy group for Americans over 50, explained that 2026 was the fifth year in a row that COLA has increased by at least 2.5 percent, the longest such streak since the 1990s.

“Over the past year, many older Americans have been under financial stress, and Social Security is an important key to their financial health.” said Dr. Mischia Minter-Jordan, CEO of AARP.

“AARP has fought for Social Security for decades — including protecting COLA from those who want cuts.” ​​

Quick look: Social Security and Medicare COLA changes for 2026

• Social Security’s official COLA for 2026 is 2.8%. This adjustment is calculated from the height at Consumer price index-W between the third quarter of 2024 and the third quarter of 2025. (source:Social Security Administration)
• Suze Orman argues that much of this increase may actually be lost because Medicare Part B premiums have risen sharply. With a 9.7% jump in standard premiums for 2026, many retirees will see most of their COLA absorbed before it reaches their bank accounts. (source: Suze Orman)
• The Medicare Part B premium for 2026 is $202.90 per month, $17.90 more than the 2025 rate of $185.00. (source:Centers for Medicare and Medicaid Services)
• The amount of COLA that retirees actually keep varies by benefit level, with those who receive smaller checks feeling the greatest impact. (source:Jeffrey Quiggle, The Streetindependent analysis)
• For the average retiree receiving $2,071 per month: A 2.8% COLA adds about $58.00, but after the Medicare increase, the true monthly gain drops to $40.10. (source:Jeffrey Quiggle, The Streetindependent analysis)
• For someone receiving $1,200 per month: COLA provides a small increase, but after the premium increase, the net improvement is only $15.70, meaning more than half of the increase is gone. (source:Jeffrey Quiggle, The Streetindependent analysis)
• COLA may feel low because it depends on… Economic inflation Data for the third quarter of the previous year. Any increases in the prices of essentials such as food, rent or utilities that occur later in the year are not reflected in the calculation. (source:Suze Orman)
• On a positive note: AARP reports that 2026 marks the fifth consecutive year with a COLA of at least 2.5%, the longest such period since the 1990s. AARP CEO Dr. Misiah Minter-Jordan notes that this consistency is important for older Americans facing ongoing cost pressures. (source:AARP)

RELATED: AARP raises red flag on Social Security and Medicare