Social Security COLA rises to 3.6% for 2027, largest since 2023

Social Security beneficiaries will get a 3.6% raise in January, the Social Security Administration announced Wednesday, marking the biggest cost-of-living adjustment in nearly half a decade and a clear step up from the 2.8% increase that took effect this year.

The 2027 COLA, which represents the largest bump since 2023, applies to more than 75 million Americans. For the typical retired worker it adds about $75 a month, lifting the average check to $2,162.67 from $2,087.52, according to The Senior Citizens League, a nonpartisan seniors’ advocacy group.

Over a full year, the average beneficiary will collect roughly $900 more, according to an estimate from both AARP and the Committee for a Responsible Federal Budget.

What pushed the 2027 COLA to 3.6%?

The adjustment is set by formula, not by Congress or the agency. Federal law requires the SSA to compare the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W, for July, August and September with the same three months a year earlier.

The CPI-W, a Labor Department inflation gauge built around the spending of working households rather than retirees, ran hot through the summer. Year-over-year CPI-W inflation stood at 3.4% in July, 3.5% in August and 3.9% in September, as noted by The Senior Citizens League. On Wednesday, the Labor Department reported that the broader consumer price index rose 3.7% in the 12 months through September.

Fuel costs were a major driver. Crude oil averaged $64.50 a barrel in January before the war in Iran sent it to a peak of $108.64 in May, according to the league, pushing the final COLA figure past the 2.8% COLA forecast by the league at the start of the year. The final figure also landed 0.9 percentage point above the most recent projection from Social Security’s trustees, the CRFB said.

In historical terms, 3.6% is only modestly above normal. It ties for 18th among the 52 adjustments made since COLAs were indexed to the CPI in 1975, the league said.

Read more: 2027 Social Security COLA puts retirement income plans under review

Why retirees may not feel ahead

Advocates for older Americans argue that the bigger number still leaves many beneficiaries short. Because the COLA looks backward, retirees will be taking the brunt of this year’s price increases for months before any relief arrives in January, The Senior Citizens League noted. In its 2026 survey, 89% of respondents said the previous adjustment was too low.

“They’re getting a slightly bigger check to pay bills that have gotten even bigger,” Shannon Benton, executive director of The Senior Citizens League, told CBS News.

AARP's own pulse check found a similar mood. In a survey taken ahead of the announcement, 76% of adults age 50 and older said a 3.5% COLA would not keep pace with rising prices, with only 23% saying it would.

The stakes are highest for lower-income clients. The poverty rate among older Americans climbed to 15.4% last year from 14.2% in 2022, CBS News reported, citing government data. That rise came even though the Census Bureau describes Social Security as the nation’s largest antipoverty program.

"AARP fought for the creation of the COLA in 1972 and has defended it ever since," Chief Executive Myechia Minter-Jordan said in a statement. “Without it, millions more older Americans would be living in poverty.”

For advisors working with retirees, the headline percentage is only a starting point. Medicare Part B premiums, which are withheld from many beneficiaries’ checks, jumped 9.7% to $202.90 a month in 2026, and Medicare Part B premiums have repeatedly outpaced the COLA in recent years. The 2027 premium, which had yet to be released as of Wednesday, will likely be a key factor for planners to build retirement income plans with firmer net-income projections.

Read more: Navigating through the Medicare maze

Policymakers split on fixing the formula

The debate around Social Security in Washington is running in two directions, with groups representing retirees pushing for a more generous index to determine the COLA. The National Committee to Preserve Social Security and Medicare, led by President Max Richtman, told CBS News it favors the use of CPI-E, which is designed to reflect the spending of older Americans who devote a larger share of their budgets to healthcare.

But the CRFB said lawmakers should weigh moving to the chained CPI or capping the COLA in dollar terms, pointing out that the 3.6% increase is worth more than $2,200 to the highest-paid individual beneficiaries. Top-earning couples who retired this year at normal retirement age will get a combined $3,600 raise, enough to push their benefits above $100,000 a year. Under the group’s COLA cap proposal, the 2027 increase would be limited to roughly $1,200, adjusted for claiming age.

AARP has pushed back against the chained CPI. Analysis from its Public Policy Institute found the switch would leave benefits 3.7% lower at age 75 and 9.2% lower at age 95 for someone who began claiming at 62.

Hanging over the debate is the program’s solvency. Social Security’s main retirement trust fund is projected to be depleted in 2032. At that point beneficiaries would face an across-the-board cut of about 22% unless Congress acts, according to the CRFB.

"With Social Security’s retirement fund less than six years away from insolvency, action will be needed soon to prevent a 22% benefit cut that could wipe out the previous nine years’ worth of COLAs all at once in 2032," the group said.