Key Points:
Premium Erosion Chain: Part B premiums grow 6% yearly while COLAs grow 2.4% -> net Social Security shrinks each year -> retirees draw more from IRAs and 401(k)s, creating additional taxable income
Five-Year Gap: Medicare Part B premiums are projected to rise 34% from 2026 to 2031, while cumulative Social Security COLAs total only 13% over the same window, a 21-point structural mismatch from the government's own reports.
Insolvency Threshold: If Congress fails to act before the retirement trust fund's projected 2032 depletion date, a 22% across-the-board benefit cut could erase the previous nine years of COLAs overnight.
Buying Power Decline: Social Security benefits have lost 14% of their purchasing power over the past decade, with the average check now worth $0.86 on the dollar compared to 2016 levels.
I spread two government reports across my desk this week. One says you are getting a raise. The other says you are getting a pay cut.
Last week I wrote about the 3.6 percent Social Security raise for 2027. About $75 more a month starting in January. Commissioner Bisignano called it greater financial stability for 76 million Americans. That sounds good until you check what Medicare does to it. Part B takes its cut first. The projected premium hike is $6.60 a month. So your real raise is closer to $68. That is the good year.
The two reports tell one story when you read them together. The Medicare Trustees say Part B will hit $272.10 a month by 2031. Today it is $202.90. That is a 34 percent jump in five years. Now look at the other report. The Social Security Trustees project COLAs of just 2.4 percent a year over the same window. Five years of those small raises add up to about 13 percent total.
Warren Buffett said it. Peter Lynch said he'd own one stock if he could find one great stock.
Jeff Brown believes he found it.
Premiums rise 34 percent. Your raise rises 13 percent. Both numbers come from the same government.
I ran the math year by year. In 2028, the Part B premium jumps $15 a month. The COLA delivers about $52. The premium alone eats 29 percent of the raise. In 2029, it gets worse. The premium climbs again. The COLA stays flat. By 2030, the premium hike is $17 against a raise of about $54. A third of your raise gone to one line item. And that is just the standard premium. The Part D deductible climbs to $700 next year. That is an $85 jump from this year. Then add Medigap. Then add prescriptions. Then add dental. Stack it all up and the raise barely covers the new costs.
This pattern is not new. It is the design. Part B has beaten the COLA three years in a row now. This year the premium jumped 9.7 percent. The COLA was 2.8 percent. Go back further. From 2000 to 2018, COLAs rose a total of 46 percent. Part B premiums rose 195 percent. Nearly four times faster. That gap compounds. Our benefits have lost about 14 percent of their buying power in ten years. Your Social Security check is worth 86 cents on the dollar compared to 2016. Every year you lose a little more ground. Every year the gap gets harder to close.
Elon Says the ‘S’ Word
Two of the most powerful men in technology, Elon Musk and Sam Altman, cannot stand each other. They have sued each other. They have been at war for years.
But within days of each other, both of them said the exact same peculiar thing: we are living at a tipping point in human history.
They call it "the Singularity."
I expect it will set off an unstoppable technological explosion. And that it will create unimaginable wealth for a small group of people.
For fifty years the idea was science fiction. Now the two men racing to build it say it is already here.
I have connected it all to something Elon could be about to switch on. He calls it his "infinite money glitch."
I lay out what these two men see coming in a short presentation. Watch it immediately.
Here's what worries me. Most of us have a brokerage account or an IRA sitting next to Social Security. We count on both. When the net check shrinks, we pull more from savings to cover the gap. I see it play out the same way every year. Larger draws mean more taxable income. More taxable income can push you past the Medicare surcharge line. Cross that line and your Part B premium jumps again on top of the standard hike. So now you need to draw even more. The system feeds on itself. You draw more to cover the gap. The gap grows because you drew more. It is a loop that tightens a little each year. Most people do not see it until the surcharge notice shows up in the mailbox.
I don't think most people realize this. 2027 may be the last year the COLA beats the premium hike. The 3.6 percent raise edges past the 3.25 percent premium increase. Barely. After that, the premium wins every year through 2031. The Trustees' own tables show it. Tyler End runs a firm called Retirable. He put it plainly. Health care costs rise 5.8 percent a year. COLAs average 2.4 percent. That is not a gap you can close with a bigger raise. It widens on its own. Three in four adults over 50 already say the COLA is not enough. The math backs them up.
And behind all of this sits a shadow nobody in Washington wants to talk about. The retirement trust fund is less than six years from running dry. The Trustees have said so in plain language. If Congress does not act, a 22 percent benefit cut could land in 2032. That would erase nine years of COLAs in a single stroke. Think about that. Nine years of raises wiped out overnight. Nobody knows if they will act in time.
Here is the number to take to the golf course. Thirty-four versus thirteen. Part B premiums are set to rise 34 percent over five years. Our Social Security raises are set to grow just 13 percent. Both numbers come from the government's own projections. Published weeks apart. One made every headline in the country. The other sits on page 207.
The SSA letter will arrive in January. It will say $75 more a month. The biggest raise in four years. Most people will feel good about it. But every January after that, the check grows less. The premium takes more. Like a faucet that drips a little harder each month. You don't notice at first. Then you look back and see five years of water damage.
More on this tomorrow.
— American Ledger
