Social Security Raises Benefits 3.6% for 2027, the Biggest Jump in Four Years

The Social Security Administration announced Wednesday that benefits will rise 3.6 percent in 2027, the largest annual cost-of-living adjustment in four years. The increase will reach more than 75 million Americans. Beginning in January, the average payment will go up by roughly $75, to about $2,170 a month.

The adjustment is meant to offset higher inflation this year, which was partly driven by rising fuel prices tied to the war in Iran. The Labor Department reported that the Consumer Price Index rose at a 3.7 percent annual rate in September. About 7.3 million people on Supplemental Security Income will see the new adjustment starting December 31, 2026.

Seniors' advocates welcomed the raise but said it falls short. This year's adjustment was 2.8 percent, and it has trailed consumer prices for seven straight months. Shannon Benton, executive director of the Senior Citizens League, said a 3.6 percent boost is welcome but will not restore the purchasing power seniors have already lost. Nancy Altman, president of Social Security Works, said the adjustment is not keeping up with prices.

Part of the dispute is the yardstick. The agency uses the CPI-W, which tracks price changes for urban wage earners and clerical workers, using inflation data from July through September. Max Richtman, president of the National Committee to Preserve Social Security and Medicare, argues that the CPI-E, an index that better reflects older Americans' spending, would be fairer because seniors spend more on health care, which has risen faster than overall inflation. His group backs two bills, the Social Security Expansion Act and the Social Security 2100 Act, that would switch to the CPI-E.

Health costs may swallow much of the gain. Medicare has not yet announced its 2027 premiums. Part B premiums, which cover doctor visits and outpatient care, are deducted automatically from monthly Social Security checks. Tyler End, a certified financial planner and CEO of Retirable, said health care inflation runs at 5.8 percent a year, while cost-of-living adjustments have averaged 2.4 percent.

The numbers behind the debate are stark. The Census Bureau calls Social Security the largest antipoverty program in the country, yet the poverty rate among seniors rose to 15.4 percent last year, up from 14.2 percent in 2022. Experts point to health costs, slow benefit growth and inadequate retirement savings. An AARP survey taken before the announcement found about three-quarters of older Americans believed the adjustment, which the survey put at 3.5 percent, would not keep pace with prices. AARP CEO Myechia Minter-Jordan said one in five older Americans has no retirement savings and that more people feel financially insecure than last year.

The longer-term outlook is harder. The Social Security trust fund is projected to run out in six years. Unless lawmakers act, all beneficiaries would face a benefit cut of more than 20 percent in 2032. Minter-Jordan said Americans cannot afford cuts to earned benefits, whether to payments or to the adjustment itself.