The Social Security Administration on Wednesday announced a 3.6% cost-of-living adjustment (COLA) for 2027.
The COLA is determined using the consumer price index for urban wage earners and clerical workers (CPI-W) data for the third quarter of the year, including the months of July, August and September. It aims to ensure that the purchasing power of Social Security benefits isn’t eroded by inflation.
On average, the COLA will increase Social Security retirement benefits by $75 per month.
“Social Security will implement this cost-of-living adjustment for 76 million Americans, giving them greater financial stability,” said Commissioner Frank Bisignano.
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The COLA will take effect for benefits paid for the month of January 2027, including Old-Age, Survivors, and Disability Insurance (OASDI) and Supplemental Security Income (SSI).
The 2027 COLA is the largest since 2023, when benefits got an 8.7% boost to account for the spike in CPI inflation that had occurred.
As inflation eased in the past three years, the COLA shrank accordingly and came in at 3.2% in 2024, 2.5% in 2025 and 2.8% in 2026.
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The larger COLA for 2027 was driven in part by the rise in energy prices this year, which surged following the outbreak of the Iran war and have remained elevated due to disruptions in the oil and gasoline supply chain.
AARP CEO Myechia Minter-Jordan said in a statement that 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.”
“That makes Social Security’s cost-of-living adjustment (COLA) critically important. It helps millions of Americans keep up with rising costs for groceries, routine bills, healthcare and everyday expenses,” Minter-Jordan added.
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The nonpartisan Committee for a Responsible Federal Budget (CRFB) noted that the 3.6% COLA “will boost average benefits by about $900 per retiree but would provide an over $2,200 increase for the very richest beneficiaries.”
“The highest earning couples who retired this year at their normal retirement age will enjoy a $3,600 combined increase – enough to push their combined benefits above $100,000 annually,” CRFB wrote.
