There’s nothing quite like a quiet morning in the Texas Hill Country: sitting on the porch of a home in Fredericksburg or Boerne, watching the sun hit the live oaks with a fresh cup of coffee in hand. It’s the kind of peace you work forty years to earn. But lately, for many retirees, that peace is being interrupted by a nagging question: Is my "raise" actually a raise?
If you’ve been keeping an eye on the news, you’ve likely seen the headlines about the 2026 Social Security Cost-of-Living Adjustment (COLA). It sounds like good news on the surface: a 2.8% increase in your monthly benefits. But for the high-income retirees we serve at Portafolio Capital Management dba Mau Sanchez Capital, that "raise" often feels more like a disappearing act.
Between the rising costs of Medicare Part B and the "stealth tax" known as IRMAA, your 2026 Social Security boost might be gone before it even hits your bank account. Let’s look at the math and, more importantly, what you can do about it.
The 2026 COLA Mirage: 2.8% Isn’t Always 2.8%
For 2026, the Social Security Administration officially announced a 2.8% COLA. This is based on the CPI-W data from late 2024 to late 2025. For the average retired worker, this translates to about an extra $56 per month.
On its own, that sounds helpful. We’ve seen inflation easing slightly in recent months, but prices for daily essentials in places like Austin and San Antonio certainly haven’t returned to 2019 levels. However, Social Security doesn't exist in a vacuum. For most retirees, the "net" benefit: the actual amount deposited into your account: is determined after Medicare Part B premiums are deducted.
And that’s where the math gets messy.
The Medicare Offset: Part B Premiums Are Jumping
While Social Security is going up by 2.8%, Medicare Part B premiums are projected to rise by nearly 10% in 2026. According to early CMS reports, the standard monthly premium is expected to hit $202.90.
If your Social Security check goes up by $56, but your Medicare premium goes up by nearly $18, you’ve already lost a third of your "raise" to the government. This is a classic example of "bracket creep" at the federal level. While you technically have more money, your purchasing power hasn't moved an inch.
For High Earners, the News is Even Tougher: Enter IRMAA
If you’ve spent your career building a significant nest egg, you aren't just dealing with the standard $202.90 premium. You are likely dealing with IRMAA: the Income-Related Monthly Adjustment Amount.
IRMAA is a surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds. For 2026, those thresholds (based on your 2024 tax return) start at:
- $109,000 for individuals
- $218,000 for married couples filing jointly
If you fall into these brackets, your monthly Part B premium doesn't just go up a few dollars; it can skyrocket to anywhere from $284.10 to $689.90 per month.
At the highest tier, a couple could be looking at nearly $16,500 a year just for Medicare Part B. When the government gives you a 2.8% raise on one hand but takes back thousands in IRMAA surcharges on the other, your retirement plan needs a surgical level of precision to stay on track.
Why "Big Bank" Advisors Miss the Mark
Most retirees who walk through our doors in the Hill Country come from the "big bank" world: the household names with thousands of clients and automated portfolios. These institutions are great at managing assets in bulk, but they often fail when it comes to the nuances of income planning.
A standard advisor at a massive institution might see a 2.8% COLA and think, "Great, my client has more cash flow." They aren't looking at your 2024 tax return to see if a one-time capital gain or a large RMD (Required Minimum Distribution) is about to trigger a massive IRMAA bill in 2026.
As a Fiduciary Financial Advisor, our job is to look at the net result. We align your risk modeling with your actual financial goals, ensuring that every dollar you withdraw is done with tax efficiency in mind. We believe a financial manager shouldn't just chase returns; they should protect what you’ve already built from unnecessary "leaks" like IRMAA and excessive fees.
Tactical Moves to Protect Your "Raise"
If you’re worried that your 2026 COLA will be swallowed by Medicare, there are strategic levers we can pull:
- The Two-Year Lookback Strategy: Remember, your 2026 Medicare premiums are determined by your 2024 MAGI (Modified Adjusted Gross Income). If you are reading this in 2025 or early 2026, we need to look at your current income to protect your 2027 and 2028 premiums.
- Qualified Charitable Distributions (QCDs): If you are over 70½, you can send money directly from your IRA to a charity. This satisfies your RMD but doesn't count toward your MAGI, potentially keeping you under an IRMAA bracket.
- Roth Conversions: Strategic conversions can lower your future RMDs, which are often the primary culprit for pushing retirees into higher Medicare brackets later in life.
- Tax-Loss Harvesting: Given the shifts in the Federal Reserve's outlook, the markets have been volatile. We use that volatility to our advantage by harvesting losses to offset gains, keeping your taxable income low.
Real Retirement Planning Happens at the Table, Not a Call Center
At Portafolio Capital Management dba Mau Sanchez Capital, we don't believe in cookie-cutter strategies. We serve families who want to reclaim control of their investments and ensure their wealth is both protected and growing.
The 2026 COLA might be a small boost, but it’s a reminder that the "small" details of retirement: Medicare, taxes, and inflation: are actually the biggest factors in whether you can sustain your lifestyle. Whether you're golfing at Boot Ranch or dining in downtown Boerne, you shouldn't have to worry if the government is taking more than its fair share of your hard-earned Social Security.
If you're concerned about how the 2026 rules will affect your specific portfolio, let’s talk. We can review your current risk modeling and ensure your income strategy is aligned with the latest COLA and Medicare realities.
Schedule a call with a fiduciary financial advisor today: https://calendly.com/portafoliocapital/15min
Learn more about our approach at https://portafoliocapital.com/ or give us a call at (512) 593-8380.
Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement.
Leave a Reply