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Social Security COLA Set at 3.6% for 2027
Cost-of-living adjustment will add $75 a month to the average retirement benefit starting in January
6-minute read
Video: What to Know About the 3.6% Social Security COLA for 2027
Key takeaways
- Social Security beneficiaries will receive a 3.6 percent cost-of-living adjustment for 2027, which would increase the average retired worker’s benefit by $75 a month.
- The COLA comes as many older Americans are struggling with rising prices, trimming their discretionary spending and even cutting back on essentials.
- AARP is fighting to protect the COLA as Congress begins to debate ways to address Social Security’s funding shortfall.
Social Security beneficiaries will get a 3.6 percent increase in their monthly payments next year, the Social Security Administration (SSA) announced on Oct. 14.
That will be the highest cost-of-living adjustment (COLA) in four years, reflecting the recent upswing in inflation. The 2026 COLA was 2.8 percent.
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The 3.6 percent adjustment will boost the average monthly benefit for a retired worker by about $75 in January, from $2,095 to $2,170, according to SSA estimates. The average survivor benefit for a widow or widower will tick up by about $69, from $1,936 to $2,005, and the average Social Security Disability Insurance (SSDI) benefit will go up by $59, from $1,642 to $1,701.
The increase will take effect with December Social Security benefits, which are paid in January.
“There’s a lot on the line financially right now for older Americans: 1 in 5 have no retirement savings, and more people feel financially insecure this year than last,” Dr. Myechia Minter-Jordan, AARP’s chief executive officer, said in an Oct. 14 statement.
“That makes Social Security’s cost-of-living adjustment critically important,” she said. “It helps millions of Americans keep up with rising costs for groceries, routine bills, health care and other everyday expenses.”
Rising costs crimping older adults’ budgets
The 2027 boost marks the sixth straight year with a COLA of at least 2.5 percent. Even with annual increases, polling shows that older Americans feel financially squeezed.
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Among Social Security recipients surveyed by AARP several weeks before the COLA announcement, 80 percent said a 3.5 percent increase would not be enough to keep up with rising prices. Seventy-two percent said they would need an increase of 5 to 8 percent to help them meet their everyday living expenses.
In another recent survey, conducted on behalf of the Nationwide Retirement Institute, an educational and research arm of the Nationwide financial services and insurance firm, 51 percent of beneficiaries polled said they have cut discretionary spending, and 38 percent said they’ve reduced spending on essentials, including groceries and medications.
“People are definitely struggling to meet their retirement needs,” says Kevin Jestice, president of Nationwide Retirement Financial Solutions.
Barbara Fabyan, 72, a retired social worker in Indiana, says she and her husband have made major changes in their spending to deal with inflation, from switching to a cheaper grocery store to cutting out “luxury snacks,” like ice cream and fancy cheese and crackers.
“We don’t go out to eat as much anymore,” she says. “We don’t give our grandkids as much money as we used to, and that kind of upsets us.”
John Foster, a 74-year-old retired steel trader in Ohio, says he and his wife are being more “prudent” in their spending, particularly when it comes to travel, as airfares and gas prices have skyrocketed.
Foster estimates that the couple’s monthly expenses have climbed about 20 percent over the past year. A weekly grocery trip that used to cost $60 to $70 now runs at least $100, he says, and their electric bills have “exploded,” prompting them to consider switching providers.
The COLA will provide a “welcome” boost to their monthly income, Foster says. “Will it make a significant change in what we do? Probably not.”
COLAs track inflation, with a lag
The COLA is based on how much the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a federal measure of price trends for a range of goods and services, changed from the third quarter of 2025 to the same period this year.
In 2026, the CPI-W rose by 3.9 percent in September, 3.5 percent in August and 3.4 percent in July, compared with the same month in the previous year, according to the U.S. Bureau of Labor Statistics.
Because each year’s COLA reflects the previous year’s price trends, there can be a delay in the impact on retirees’ bank accounts, but Social Security recipients can catch up when inflation cools.
For example, 2022’s 5.9 percent increase was outpaced by that year’s inflation, which reached 9 percent. That resulted in an 8.7 percent COLA for 2023, a year when inflation ebbed to 3.4 percent by December.
Experts participating in the Federal Reserve’s Survey of Professional Forecasters project inflation will cool slightly in 2027, with the broader Consumer Price Index, the main federal inflation gauge, expected to rise by 2.5 percent in the first quarter of next year and 2.3 percent in the second quarter.
Rich Johnson, vice president of financial security at the AARP Public Policy Institute, says that high energy and diesel prices are still rippling through the economy and affecting the cost of many other goods and services. He predicts that “affordability will still be an issue [in 2027], even with this COLA.”
Insurance, utilities and health care expenses sting
The cost of some goods and services, such as utilities and homeowners’ insurance, have risen at a faster clip than overall inflation this year, putting pressure on the budgets of older adults who rely primarily on Social Security for their retirement income.
For example, the insurance marketplace Insurify projects that homeowner’s insurance costs will climb 4 percent this year, after rising 12 percent in 2025, as increasingly severe storms and wildfires drive up premiums. “Rising home insurance premiums could pose significant financial challenges for older adults with fixed incomes and those nearing retirement,” says Julia Taliesin, an economic analyst at Insurify.
COLA gains can also be partially offset by increases in premiums for Medicare Part B, which covers outpatient services such as doctor visits. For most Part B participants, premiums are deducted directly from their Social Security payments. The standard Part B monthly premium is projected to increase by $6.60 in 2027, to $209.50.
Stephanie Akpa, head of policy and public affairs at Atticus, a Social Security disability law firm, says the COLA doesn’t always capture the spending patterns of older adults, including the significant share of their budgets that go toward health care.
That’s particularly true for SSDI beneficiaries, who are often managing complex medical conditions that require more frequent doctors’ appointments, higher prescription drug costs and the purchase of medical devices, Akpa says: “Medical costs just eat a lot more into their budget,” exacerbating the broader inflation pressures beneficiaries face.
AARP staunchly opposes calls to reduce or cap the COLA, which have grown as congressional debate heats up over how to address Social Security’s funding shortfall. One proposal that has gained some attention would base the COLA on a different inflation index, the Chained CPI, which assumes consumers will change their purchasing habits when prices go up. For example, if beef prices skyrocket, some shoppers might buy more chicken.
Switching from the CPI-W to the Chained CPI would reduce the cost-of-living adjustment by an average of about 0.3 percentage points per year, according to estimates by Social Security’s actuaries. So a 2.6 percent COLA as currently measured might be 2.3 percent using the Chained CPI.
That reduction would compound over time. AARP researchers estimate that implementing the Chained CPI beginning in 2002, soon after it was created, would have cost the average male retiree a cumulative total of $17,570 through 2026; the average female retiree would have lost a total of $13,480 over that period.
“All of these proposals would ultimately do the same thing: They would be a massive cut to Social Security that would get worse as you get older,” says Bill Sweeney, AARP’s senior vice president for government affairs. “The COLA is barely keeping up as it is, and proposals to cut the COLAs or to make them even smaller would be truly devastating.”
“AARP fought for the creation of the COLA in 1972 and has defended it ever since,” said Minter-Jordan. “Americans cannot afford cuts to the benefits they have earned — whether through changes to their hard-earned payments or the COLA.”
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