The Social Security Administration says beneficiaries will receive a 3.6% cost-of-living adjustment in 2027. The increase begins with January payments and is expected to add about $75 a month to the average benefit.
Social Security’s annual adjustment is based on inflation during July, August and September of the previous year. Those three months’ figures produced the 3.6% increase.
Bill Sweeney, AARP’s senior vice president of government affairs, said the adjustment matters because Social Security is often the only part of a retiree’s income that automatically rises with inflation. That protection becomes especially important as people age, he said, when returning to work to cover a budget gap may no longer be practical.
Social Security announces 2027 cost-of-living adjustment
Retirement planning has changed as traditional pension plans have become less common. Many Americans now depend more heavily on personal savings and Social Security. Sweeney described the old model as a three-legged stool—pensions, private savings and Social Security—and said younger retirees are increasingly left with only the latter two.
He said roughly half of Americans rely on Social Security for nearly all their income. For about one in five, it provides almost all of it, making the annual adjustment crucial to meeting basic expenses, including food.
One Social Security adjustment could cut the 75-year shortfall in half
The 2027 increase will be the largest since 2023, when benefits rose 8.7% following a sharp jump in inflation. As inflation cooled, the adjustments were smaller: 3.2% in 2024, 2.5% in 2025 and 2.8% in 2026.
Sweeney said the adjustment helps Social Security benefits keep up during periods of high inflation, so recipients are less likely to fall behind as costs rise.
