Retired Americans will get at least a bit more relief from inflation in 2027 than they did this year.
On Wednesday, the Social Security Administration announced that 2027’s cost-of-living adjustment (COLA) to beneficiaries would be 3.6%—the fifth-largest increase in 35 years, and a decent step up from 2026’s increase of 2.8%. 2027’s COLA is also the largest acceleration in COLA since 2022, when Social Security announced payments would jump by 8.7% after having climbed 5.9% the year before. It’s better than the 10-year average of 3.1%, too.
But the nominal increase isn’t necessarily going to blow retirees away.
“That’s roughly $75 more per month for the average retiree,” says Sonu Varghese, Chief Macro Strategist at Carson Group, a registered investment advisor. “That’s hardly a windfall, and is simply compensation for higher prices, and rising Medicare premiums could eat into the increase.”
The SSA says 2027’s COLA will affect about 72 million Social Security beneficiaries, as well as nearly 7.3 million people who receive Supplemental Security Income (SSI) benefits.
What Is the Cost-of-Living Adjustment (COLA)?
The cost-of-living adjustment (COLA) is an annual, formulaic change to Social Security benefits that reflects changes in consumer prices for goods and services over the past year. Specifically, it’s meant to help offset any inflation from the year prior by providing retirees with a higher benefit.
Related: 10 Common Social Security Mistakes You Should Know
Inflation, in this case, is measured by looking at changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The SSA looks at the percentage increase in CPI-W from the third quarter of the most recent year that a cost-of-living adjustment was made, to the CPI-W from the third quarter of the current year.
If CPI-W increases, Social Security benefits will be raised by the same percentage—rounded to the nearest tenth of a percent—at the start of the following year. In this case, CPI-W between July and September 2026 grew by an average of 3.6%, leading to the 3.6% bump in Social Security benefits for 2027.
If there’s no increase, no COLA will be announced. (That happens infrequently; 2010, 2011, and 2016 are the only three years in which there has been no COLA.)
“The COLA is a vital component of Social Security, ensuring older Americans have an inflation-protected source of income in retirement,” AARP CEO Jo Ann Jenkins says. “This adjustment means older Americans will receive needed relief to help better afford essential items, from groceries to gas.”
Related: What Is a Roth Conversion? [A Tax-Smart Retirement Strategy]
When Will I Receive My Increased Benefit?
The 2027 COLA will start impacting Social Security benefit checks in January 2027, and SSI benefit checks at the end of December.
Here’s a quick look at when Americans receive their first Social Security checks, which hinges on where your birthday falls within your birth month:
| Expected Benefit Arrival Dates | |
|---|---|
| Birthday falls on | Check should arrive |
| 1st-10th | Jan. 13, 2027 |
| 11th-20th | Jan. 20, 2027 |
| 21st-31st | Jan. 27, 2027 |
That said, if you’ve received Social Security benefits since before May 1997, you’ll receive your first 2027 benefit check on Dec. 31, 2026. Under normal circumstances, the first check would arrive on Jan. 3, 2027; however, Jan. 3 is a Sunday, so the payment will be made earlier.
Supplemental Security Income (SSI) checks reflecting the new payment will also be sent out Dec. 31, 2026. SSI checks typically go out on the first of the month, but January’s checks are always pushed up a day because New Year’s Day is a federal holiday.
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How Does the 2027 COLA Compare to Past Years?
Social Security’s annual COLA naturally varies from one year to the next:
| Past COLAs | |
|---|---|
| Year | % Increase |
| 2027 | 3.6% |
| 2026 | 2.8% |
| 2025 | 2.5% |
| 2024 | 3.2% |
| 2023 | 8.7% |
| 2022 | 5.9% |
| 2021 | 1.3% |
| 2020 | 1.6% |
But if it feels like COLA doesn’t always match inflation, that’s because, as mentioned before, COLA is based on CPI-W … but the measure of inflation most of us tend to follow is the plain ol’ Consumer Price Index (CPI). Also, we tend to look at annual CPI in terms of data from across the entire year, whereas COLA is based on a Q3-to-Q3 reading.
For context, check out the following table to see how the CPI-W growth that led to the 2020-27 COLA increases doesn’t quite match up with the corresponding CPI growth in those same years.
| Inflation Rates | ||
|---|---|---|
| Year | CPI-W | CPI |
| 2026 | 3.6% | 3.3%* |
| 2025 | 2.8% | 2.7% |
| 2024 | 2.5% | 2.9% |
| 2023 | 3.2% | 4.1% |
| 2022 | 8.7% | 8.0% |
| 2021 | 5.9% | 4.7% |
| 2020 | 1.3% | 1.2% |
| 2019 | 1.6% | 1.8% |
| * Year-to-date as of September 2026 CPI data. Source: US Inflation Calculator |
||
For that reason, many seniors complain that the increases aren’t enough to keep pace with the actual inflation they feel.
“Year after year, they warn that Social Security’s meager increases won’t be enough,” says Shannon Benton, director of the nonpartisan senior advocacy group The Senior Citizens League. “And the Census Bureau estimates that about 10% of retirement-age Americans live in poverty.”
Related: Average Monthly Social Security Benefits by Age
Other Social Security Changes for 2027
Social Security announced other updates pertaining to taxes and worker earnings limits:
- The amount of covered earnings required to earn a Social Security work credit will increase in 2027. (You need 40 work credits to qualify for Social Security retirement benefits.) For 2027, you must make at least $1,970 in covered earnings during a quarter to receive a work credit, up from $1,890 in 2026. And you can compile a maximum of four work credits per year, at $7,880 in total earnings.
- Note: You can earn work credits at a faster rate than once per quarter. For instance, if you made $7,880 in covered earnings during your first month of work, you would earn all four credits for 2027.
- In 2027, the maximum earnings subject to Social Security tax will be $192,300, up from $184,500 in 2026.
- Workers who are younger than full retirement age (FRA), but are collecting Social Security benefits, have an earnings limit of $25,560 in 2027 (up from $24,480 in 2026). That means the SSA will deduct $1 for every $2 earned over $25,560 in 2027.
- Meanwhile, beneficiaries who work and will reach FRA in 2027 will have an earnings cap of $67,920 in 2027 (up from $65,160 in 2026). That means the SSA will deduct $1 for every $3 earned over $67,920 up until the month the worker reaches FRA.
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