Social Security Announces 3.6% Cost‑of‑Living Adjustment for 2027
The Social Security Administration announced a 3.6% cost‑of‑living adjustment for 2027, raising average monthly benefits by $75. The increase, the largest since the 8.7% boost in 2023, will take effect on January payments.
The adjustment is calculated from inflation data collected in the third quarter of the prior year, which showed a 3.6% rise in July, August and September. That figure determines the increase applied to benefits beginning in January 2027. Previous COLAs were 3.2% in 2024, 2.5% in 2025 and 2.8% in 2026.
Importance for Retirees
Bill Sweeney, AARP’s senior vice president of government affairs, said Social Security is the only inflation‑adjusted income source for most retirees. He noted that roughly half of beneficiaries rely on Social Security for almost all of their income, and 20% depend on it for virtually their entire livelihood. The COLA becomes critical for retirees in their 70s and 80s, when returning to work is unrealistic. It ensures Social Security keeps pace with rising costs during those later years.
Social Security Chief Projects 90‑Year Longevity
Social Security’s chief, Bisignano, said the program will remain solvency for another 90 years. He emphasized that Social Security and private savings now fill the gap left by declining pensions.
Adjustment Could Halve 75‑Year Shortfall
The 2027 COLA, the biggest annual increase since 2023, will help halve the program’s 75‑year funding shortfall. Social Security’s annual COLA boosts benefits for the following year when inflation rises in the current year. Consistent adjustments are seen as essential to prevent beneficiaries from falling behind during high‑inflation periods.
