The monthly Social Security check will grow by its largest amount in four years, and for once, the increase could match your spending.
The Social Security Administration (SSA) confirmed a 3.6% cost-of-living adjustment (COLA) for 2027, adding roughly $75 to the average monthly retirement benefit. Nearly 72 million beneficiaries and about 7.3 million Supplemental Security Income recipients will receive larger payments starting in late 2026 and early 2027.
The increase follows a 2.8% COLA in 2026 that rising Medicare Part B premiums partially offset before retirees could put it toward daily expenses.
The formula behind annual benefit increases has drawn criticism from retiree advocates who say it undercounts what older Americans pay for housing and healthcare.
Recent inflation data suggests the 2027 adjustment may be the first since 2023 to preserve retirees’ buying power after three years of erosion, The Motley Fool reported.
Also Read: Social Security’s COLA bump may not offset what’s coming
What the 2027 COLA changes for retirees and workers
The average retired worker’s monthly benefit will climb to $2,170 in January 2027 from $2,095 before the adjustment. Married couples collecting benefits will see a combined increase of $117 each month, bringing their total to $3,355, the SSA confirmed.
Martha Shedden, president of the National Association of Registered Social Security Analysts, cautioned retirees against viewing the COLA as extra spending power, Kiplinger reported.
<strong>Retirees shouldn’t interpret a higher COLA as having more spending money…. The objective is preservation of purchasing power, not an increase in purchasing power</strong>.
The maximum earnings subject to Social Security payroll tax rises to $192,300 from $184,500 in 2026. That $7,800 increase means higher earners and self-employed workers will pay Social Security taxes on a larger portion of their annual income.
Why 3 years of purchasing power erosion may finally end
The SSA sets each COLA by comparing third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data from the current year against the prior year’s readings.
The CPI-W tracks spending in working-age households where wages supply most of the income. The Consumer Price Index for the Elderly (CPI-E) captures spending patterns among Americans aged 62 and older, who face higher housing and medical costs.
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Critics have pushed for years to make CPI-E the official COLA formula in place of CPI-W, The Motley Fool highlighted.
CPI-E inflation outpaced CPI-W by an average of 0.7 percentage points annually over the past three years. That gap eroded more than 2% of retirees’ buying power, as benefit increases consistently fell short of the spending older Americans incurred, the analysis found.
Benefits have lost roughly 13.7% of their buying power since 2016 as rising housing and transportation costs outpaced annual adjustments, the Senior Citizens League’s 2026 Loss of Buying Power study found.
CPI-E inflation now runs even with CPI-W in 2026 after three years of divergence between the indices, The Motley Fool documented.
That convergence makes the 2027 COLA more accurately reflect retiree spending than any adjustment since the 8.7% increase in 2023.
Social Security’s 2027 COLA could better reflect retirees’ spending as inflation measures converge, potentially easing years of purchasing power erosion.ingwervanille / Getty Images
Medicare Part B premiums could trim retirees’ net gain
Most retirees will not pocket the full $75 average monthly increase, because Medicare Part B premiums are deducted from Social Security checks before payment.
The 2026 Medicare Trustees Report projects a standard Part B premium of about $209.50 in 2027, up roughly $6.60 from $202.90. That projected 3.25% Part B increase is far more manageable than the roughly 10% premium jump retirees absorbed in 2026.
Shannon Benton, executive director of The Senior Citizens League, told CBS News the adjustment would not necessarily restore the buying power retirees already lost.
Tyler End, CEO of Retirable, explained to CBS News that healthcare inflation runs about 5.8% annually.
The Social Security Trustees project COLAs will average about 2.4% annually from 2027 through 2031, meaning healthcare costs will likely continue to outpace the annual adjustment.
Retirees will not learn the official 2027 Part B premium until later this fall when federal health officials finalize the number, AARP indicated.
How beneficiaries can preview their 2027 COLA before notices arrive
Beneficiaries with my Social Security accounts can view their exact COLA notice online starting in late November 2026, weeks before paper notices arrive, the SSA stated. Creating an account at ssa.gov/myaccount before Nov. 18, 2026, lets beneficiaries view their personalized COLA notice online as soon as it posts.
A Nationwide Retirement Institute 2026 Social Security survey found that 74% of current beneficiaries have adjusted their finances because rising costs outpaced benefit growth.
Supplemental Security Income recipients will see their higher payments start on Dec. 31, 2026, a month before the adjustment reaches retirement beneficiaries, the SSA confirmed.
Each household’s 2027 budget will depend on whether their individual COLA increase, after Medicare deductions, matches the cost of groceries, housing, and healthcare.
Related: Social Security announces new cost-of-living adjustment for 2027