Social Security recipients will get a 3.6% bump in benefits in 2027

By Tami Luhby, CNN

(CNN) — Senior citizens and other Social Security beneficiaries will receive a 3.6% boost in their monthly payments in 2027, the Social Security Administration announced Wednesday, making it the largest cost of living adjustment since 2023.

Monthly payments for retired workers will rise by about $75 to an estimated average of $2,170 starting in January, the agency said. Nearly 72 million senior citizens, people with disabilities and others receive Social Security benefits.

The roughly 7.3 million lower-income people who receive Supplemental Security Income, or SSI, will also receive a 3.6% bump. Some people receive both Social Security benefits and SSI.

Social Security monthly payments are a key source of income for many senior citizens. That makes the annual adjustment “critically important,” Myechia Minter-Jordan, CEO of AARP, a powerful advocacy organization for older Americans, said in a statement.

“There’s a lot on the line financially right now for older Americans: one in five have no retirement savings, and more people feel financially insecure this year than last,” she said. The annual raise “helps millions of Americans keep up with rising costs for groceries, routine bills, health care and other everyday expenses.”

However, many older Americans say the annual adjustments, known as COLAs, haven’t been enough to cover their ever-rising expenses.

Inflation has ticked up this year amid the ongoing war with Iran, which has sent gas and diesel prices soaring. But Social Security recipients only received a 2.8% cost-of-living adjustment for 2026.

The COLA is based on an inflation metric from the third quarter of the prior year. A related metric, the Consumer Price Index, rose 3.7% in September compared with a year ago, the Bureau of Labor Statistics announced Wednesday.

In 2023, Social Security beneficiaries saw an 8.7% increase, following the surge in inflation the year before.

Part of beneficiaries’ COLA for 2027 will be eaten up by an increase in Medicare Part B premiums, which should be released in the coming weeks. The monthly premium for 2027 is expected to rise to $209.50, up $6.60 from this year, according to Medicare’s most recent trustees report. That’s much smaller than the nearly $18 jump in premiums for this year.

Crucial annual raise

Many senior citizens and their advocates have pushed for changes to the COLA to have it better reflect their actual cost of living.

The inflation measure used to calculate the COLA is designed to reflect the costs for working Americans, not retirees, said Nancy Altman, president of Social Security Works, an advocacy group. Older Americans spend a larger share of their income on healthcare, housing and other necessities.

“The COLA adjustment will help. But it doesn’t fully account for the costs that Social Security beneficiaries face,” said Altman, who supports switching to another inflation measure geared to spending by the elderly.

Social Security benefits have lost 13.7% of their buying power over the past decade, according to a recent analysis by The Senior Citizens League, an advocacy group. Put another way, a dollar of benefits in 2016 is only worth 86 cents today.

Payments would have to jump by nearly $296 a month, or about $3,550 annually, to restore their buying power for the average beneficiary, the analysis found.

Others, however, would like to reduce the COLA’s generosity – particularly for better-off retirees – to help stabilize Social Security’s finances.

Those collecting the maximum monthly Social Security benefit will enjoy a boost of more than $2,200 for next year, compared to a roughly $900 annual uptick for the average retiree, according to the Committee for a Responsible Federal Budget, a watchdog group. It noted that Social Security’s trust fund will be drained in six years, which will result in a benefit cut of 22%.

“To help restore Social Security solvency, lawmakers should consider reforming future COLAs,” the committee said in a blog post.

This story has been updated with additional information.

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