The Social Security Administration (SSA) of the United States announced on Wednesday, October 14, that the monthly benefits for elderly and other Social Security beneficiaries, commonly known as Social Security Benefits, will be increased by 3.6% in 2027. This marks the largest cost-of-living adjustment since 2023.
Starting from January next year, retired individuals will see an increase of around $75 in their monthly benefits, with the average amount expected to reach $2,170. Currently, nearly 72 million elderly, disabled individuals, and other groups receive Social Security benefits.
Approximately 7.3 million low-income individuals receiving Supplemental Security Income (SSI) will also receive a 3.6% benefit increase. Some individuals receive both Social Security benefits and SSI.
SSA Director Frank Bisignano stated in a release that this adjustment will provide beneficiaries with “greater financial security.”
For many elderly individuals, Social Security benefits play a crucial role in their income. Myechia Minter-Jordan, CEO of the AARP (American Association of Retired Persons), a group advocating for the interests of American seniors, emphasized the importance of this annual adjustment in a statement.
She said, “Currently, American seniors face severe financial challenges: one-fifth of seniors have no retirement savings, and more people feel financially insecure this year compared to last year.”
Minter-Jordan added that this annual increase helps millions of Americans cope with the rising pressures of food expenses, daily bills, healthcare, and other everyday costs.
The calculation basis for the annual Cost-of-Living Adjustment (COLA) for retirees and disabled beneficiaries relies on the inflation index from the previous year’s third quarter. Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that the Consumer Price Index (CPI) as the relevant indicator rose by 3.7% year-over-year in September.
The funding for COLA comes from the payroll taxes collected from workers and employers (for incomes up to a certain annual limit). The annual earnings tax limit will increase from $184,500 in 2026 to $192,300 in 2027.
For workers who have not reached full retirement age, the income threshold will be raised to $25,560. For every $2 of income above $25,560, $1 will be deducted from the benefits.
For individuals reaching full retirement age in 2027, the income limit increases to $67,920. For every $3 of income above $67,920, $1 will be deducted from the benefits until the worker reaches the month prior to full retirement age. Workers who have reached or exceeded full retirement age for the whole year have no income threshold restrictions.
Previously, due to a high inflation rate in the previous year, Social Security beneficiaries received an 8.7% benefit increase in 2023. Part of the 2027 Cost-of-Living Adjustment for beneficiaries will be offset by an increase in Medicare Part B premiums, with rates expected to be announced in the coming weeks. According to the latest report from the Medicare trustees, the monthly premium for 2027 is projected to rise to $209.50, an increase of $6.60 compared to this year. This increase is significantly lower than the nearly $18 premium increase this year.
Shannon Benton, Executive Director of the Senior Citizens League, a group advocating for the interests of American seniors, stated that while the upcoming increase next year is welcome for seniors who constitute the core of Social Security retirement beneficiaries, it still seems insufficient in the face of continually rising living costs.
“For years, seniors have watched their expenses increase at a rate faster than the growth of benefits,” Benton said. “While this may provide some breathing room, it cannot make up for the impact of price increases over the past decade.”
A survey conducted by the league revealed that 89% of American seniors feel that the 2.8% cost-of-living adjustment implemented in 2026 was inadequate considering the rising costs of living in the economy. The survey also found that approximately 44% of seniors rely entirely on Social Security income as their source of revenue.