The 2027 Social Security COLA Is Official. Here’s How Much the Average Retiree’s Check Will Rise
The Social Security Administration just locked in next year's COLA, and while the number looks promising on paper, a closer look reveals why many retirees could still end up worse off financially in 2027.
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If you’re among the Social Security recipients who were hoping your 2027 cost-of-living adjustment, or COLA, would be significant, there’s good news. The Social Security Administration just announced that the 2027 COLA will be 3.6%. Compared to the 2.8% raise benefits got earlier this year, that’s a huge difference.
If you collect an average Social Security check, your benefits may get a decent boost in the new year. But it’s important to take that number with a grain of salt.
The average Social Security check gets a $75 bump
The average Social Security retirement benefit today is $2,088, so a 3.6% COLA boosts the typical benefit by $75 per month. On an annual basis, that’s an additional $900.
Of course, it’s too soon to calculate your actual raise if you’re enrolled in Medicare. That’s because seniors who are on Medicare and Social Security pay for Part B out of their monthly benefits.
If the cost of Part B increases in the new year, that’s going to come out of your COLA directly. A $10 Medicare Part B hike, for example, will reduce the typical COLA from $75 to $65. We don’t know when an official Part B number will be announced, but last year, seniors had to wait until mid-November.
Will the 2027 COLA actually hold up?
The purpose of Social Security COLAs is to help benefits keep pace with inflation. But whether the upcoming COLA can actually do that is questionable.
Part of the problem boils down to how Social Security COLAs are calculated. They’re based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, during the third quarter of the year. When there’s an increase in the CPI-W, benefits get a COLA. No increase, and benefits stay where they are.
But the CPI-W does not accurately reflect the costs seniors on Social Security incur. The index measures changes in the costs workers incur, which tells a different story.
Even though Social Security has received some generous COLAs over the past decade, benefits have lost an estimated 13.7% of their buying power since 2016, according to the nonpartisan Senior Citizens League. The reason is that seniors’ real-world costs rose faster than the CPI-W during that period.
For this reason, it’s important to have realistic expectations about your upcoming COLA. You may be excited to see your Social Security checks get a nice boost. But if you collect an average benefit and your actual costs increase to the point where you’re spending more than $75 extra per month in 2027, you won’t be in a better financial situation. You could easily, in fact, end up in a worse one.
That’s why you should take steps to improve your finances in 2027 beyond just waiting for the upcoming COLA to hit your Social Security checks. Shedding expenses where you’re able to, relocating strategically, and finding part-time work you can manage could all help you stretch your benefits further and potentially reduce some of the financial stress you’ve been experiencing.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, The Washington Post, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
