Social Security recipients received a 2.8% cost-of-living adjustment (COLA) in January 2026, adding an average of $56 per month to retirement checks. But there's a catch: Medicare Part B premiums jumped 9.7%, from $185 to $202.90 monthly. For most retirees who have premiums deducted from their Social Security, this reduces the net COLA gain to just $38 per month.
Here are five strategies to help maximize what you actually keep from your Social Security benefits.
1. Review Your Medicare Part D Coverage
The fall enrollment period is your opportunity to shop for better prescription drug coverage. Your current Part D plan's premium, cost-sharing, and formulary can change each year. According to Medicare planning experts, many retirees stick with the same plan out of habit, potentially paying more than necessary.
Good news for 2026: The Inflation Reduction Act caps out-of-pocket prescription drug spending at $2,100 annually. If you take expensive medications, this protection alone could save thousands compared to previous years.
2. Compare Medigap Rates
If you've had the same Medigap supplemental policy for several years, rates may have crept up significantly. AARP recommends comparing current rates with other providers or considering a different plan letter that better fits your healthcare needs. Visit Medicare.gov to compare local Medigap plan rates.
3. Understand the IRMAA Two-Year Lookback
Higher-income retirees pay Income-Related Monthly Adjustment Amounts (IRMAA) on top of standard Medicare premiums. In 2026, these surcharges kick in for individuals with incomes above $109,000 and couples above $218,000.
Here's the critical detail: IRMAA determinations for 2026 are based on your 2024 tax return. This two-year lookback means proactive planning is essential. Financial advisors suggest strategies like managing the timing of IRA distributions, capital gains realizations, and Roth conversions to stay below IRMAA thresholds.
4. Take Advantage of the New Senior Tax Deduction
A new tax benefit for 2026 allows taxpayers aged 65 and older to claim an additional deduction of up to $6,000. This deduction may help reduce or eliminate federal income taxes on your Social Security benefits, effectively increasing your take-home income.
Combined with the higher standard deduction for seniors (which rises to $34,700 for married couples where both are 65+), this can meaningfully reduce your tax burden.
5. Consider Roth Conversions for Future IRMAA Control
For those still in their pre-retirement or early retirement years, converting traditional IRA funds to Roth accounts can be a powerful long-term strategy. Since qualified Roth distributions don't count toward Modified Adjusted Gross Income (MAGI), they won't trigger higher Medicare premiums in future years.
This strategy involves paying taxes now on converted amounts, but it creates tax-free income streams that provide more control over future IRMAA exposure and Social Security taxation.
The Bottom Line
While you can't control Social Security COLA adjustments or Medicare premium increases, you can take steps to maximize the income you actually keep. The combination of prescription drug caps, available deductions, and strategic income planning can help offset the sting of rising healthcare costs.
For personalized guidance, consider consulting with a financial advisor who specializes in retirement income planning. Small adjustments in how and when you receive income can make a meaningful difference in your long-term financial security.
Sources: Social Security Administration, AARP, Franklin Templeton, Morningstar, Focus Partners