Gerelyn Terzo

Wed, July 1, 2026 at 6:04 AM EDT 6 min read

Quick Read

• Social Security tax thresholds of $32,000 and $44,000 for married filers, frozen since 1984, let inflation silently push retirees into owing taxes on up to 85% of benefits.

• Traditional IRA withdrawals count dollar-for-dollar toward provisional income, while Roth and taxable brokerage withdrawals do not, making withdrawal sequencing critical for retirees.

• Required minimum distributions beginning at 73 can force provisional income past the 85% threshold, but early Roth conversions in lower-income years can reduce that future burden.

• Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.

The couple is both around 70, retired, drawing most of their income from Social Security with modest withdrawals from a traditional IRA to cover what the monthly check does not stretch to. They read the morning economic headlines: May's core PCE rose at a 3.4% annual rate, the highest since October 2023, while headline PCE ran at 4.1%, the highest since April of that same year. The Commerce Department's Bureau of Economic Analysis publishes that report, and PCE is the Federal Reserve's preferred inflation gauge.

They feel the prices at the grocery store and the pharmacy, and they know what a hot inflation reading usually means: a larger cost-of-living raise on next year's Social Security check. Retirees in online forums describe the same bittersweet feeling, relieved that a bigger raise may be coming and uneasy that it never seems to keep pace with what they actually spend. Fed Chair Warsh recently reinforced a commitment to deliver price stability and signaled a possible rate hike as soon as September, with energy prices tied to the Iran war seeping into healthcare and utilities.

Are you ahead, or behind on retirement? SmartAsset's free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don't waste another minute; learn more here.

One clarification matters before the rest of the story. PCE does not set the Social Security cost-of-living adjustment (COLA). The COLA is calculated by the Social Security Administration (SSA) from the CPI-W, a separate index published by the Bureau of Labor Statistics, using the third-quarter average. A hot PCE print signals that inflation is running warm, which historically points toward a heavier COLA, but it is not the formula itself.