Social Security sets 2027 benefit increase at 3.6%

More than 75 million Americans will receive a 3.6% increase in Social Security benefits in 2027, the largest annual adjustment in four years. The increase will add about $75 to the average monthly payment, but advocates for older Americans say it may not be enough to cover rising expenses.

The Social Security Administration announced the cost-of-living adjustment, or COLA, on Wednesday. Starting in January, the average monthly Social Security payment will rise to about $2,170, the agency said. About 7.3 million people who receive Supplemental Security Income will see the increase reflected in payments beginning Dec. 31, 2026.

The adjustment follows a year of elevated inflation, driven in part by higher fuel prices linked to the war in Iran. The Labor Department said Wednesday that the Consumer Price Index rose 3.7% in September from a year earlier. That figure is higher than the 2027 benefit increase, though the COLA is calculated using a different index and three months of data rather than September alone.

“While a 3.6% COLA is certainly welcome, it wouldn’t necessarily restore the purchasing power seniors have already lost,” Shannon Benton, executive director of the Senior Citizens League, told CBS News. “The COLAs are designed to keep pace with inflation, not make up for years of falling behind.”

Recipients received a 2.8% adjustment in 2026. According to CBS News, that increase has lagged the Consumer Price Index for the last seven months. A Senior Citizens League survey cited by NBC News found that 89% of older Americans considered this year’s adjustment inadequate and that about 44% of seniors received all their income from Social Security.

The Social Security Administration calculates its annual COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, for July, August and September. Advocates argue that the measure does not adequately capture older Americans’ spending, particularly on medical care and prescription drugs. NBC News reported that rent and home energy costs are also concerns for many seniors.

“We favor the adoption of the CPI-E (Consumer Price Index for the Elderly), which calculates the impact of inflation on seniors’ true living costs,” Max Richtman, president of the National Committee to Preserve Social Security and Medicare, told CBS News. The group supports two congressional bills that would make that change: the Social Security Expansion Act and the Social Security 2100 Act.

The pressure on household budgets extends beyond the annual adjustment. According to government data cited by CBS News, the poverty rate among seniors rose from 14.2% in 2022 to 15.4% last year. An AARP survey conducted before the COLA announcement found that about three-quarters of older Americans thought a 3.5% increase would not keep pace with prices.

Social Security also faces a longer-term funding challenge. CBS News reported that its trust fund is projected to become insolvent in six years and that, without action by lawmakers, recipients would face a benefit cut of more than 20% in 2032.