Social Security benefits rise 3.6 percent in 2027 as inflation accelerates

The Social Security Administration announced Wednesday that benefits will rise 3.6 percent in 2027, the annual cost-of-living adjustment, known as the COLA, that applies to both Social Security and Supplemental Security Income benefits, CNBC reported.

The agency said retirement benefits will increase by $75 a month on average. About 72 million Social Security recipients will see the higher payments in January, and about 7.3 million SSI beneficiaries will receive higher payments starting December 31, according to the agency.

Social Security Commissioner Frank Bisignano said in a statement, “Social Security will implement this cost-of-living adjustment for 76 million Americans, giving them greater financial stability.”

The 3.6 percent figure is the largest since 2023, when beneficiaries received an 8.7 percent increase, the biggest in four decades. The 2026 adjustment was 2.8 percent, and the 2022 adjustment was 5.9 percent. Over the past decade, adjustments have averaged about 3.1 percent, according to the Social Security Administration.

The announcement came the same day the Bureau of Labor Statistics released September inflation data. The consumer price index rose 3.7 percent over the past 12 months, and the index for urban wage earners and clerical workers, known as the CPI-W, rose 3.9 percent, CNBC reported. The COLA is calculated from the CPI-W, comparing the third quarter of the previous year with the third quarter of the current year.

Medicare costs will draw on part of the increase. The standard monthly premium for Medicare Part B is projected to be $209.50 in 2027, up from $202.90 in 2026, according to a report from the Medicare trustees. That is a difference of $6.60 a month. Part B premiums are typically deducted directly from Social Security checks. Premiums for Medicare Part D prescription drug plans, which can also be deducted, may see modest increases in 2027, according to an analysis by KFF, a nonpartisan health policy research group. Beneficiaries with higher incomes may pay income-related surcharges.

The agency also announced that the maximum amount of earnings subject to the Social Security payroll tax will rise to $192,300 in 2027 from $184,500, NBC Connecticut reported.

Many older Americans said ahead of the announcement that they expected an increase to fall short. In an AARP survey of 1,023 adults ages 50 and older, conducted September 17 to 21, 76 percent said a 3.5 percent COLA would not be enough. Seven in 10 said an increase between 5 percent and 8 percent would be sufficient. The survey had a margin of error of 4.25 percent, CNBC reported.

About 40 percent of Social Security beneficiaries ages 65 and older rely on the program for at least half of their income, according to AARP. AARP CEO Myechia Minter-Jordan said in a statement that the COLA is “critically important” because it helps millions of Americans cover rising everyday costs, including groceries, routine bills and health care.

The formula behind the adjustment is also under discussion. Policymakers and advocates have proposed alternatives to the CPI-W. One is the chained CPI, an index that accounts for changes in buying habits as prices rise. An AARP analysis found that switching to the chained CPI would “substantially lower benefits over time.” Another is the CPI-E, an experimental index that tracks spending by people ages 62 and older. Some experts say the CPI-E does not necessarily grow much faster than the CPI-W. According to CNBC, switching measures is among the changes lawmakers may consider in future Social Security reform.

Nancy Altman, president of Social Security Works, an advocacy group focused on expanding Social Security, said, “Social Security’s future is on the ballot this November, and that includes the size of annual COLA adjustments.”

The Social Security Administration will send beneficiaries notices with their specific 2027 benefit amounts, payment dates and any deductions. Beneficiaries with online My Social Security accounts can view that information starting in late November. Beneficiaries without an online account who want to see their notice online must create an account and opt into paperless notices by November 18. Those who have not signed up for online notices will receive mailed statements in December, according to the agency.