Social Security Benefits Will Rise 3.6% Next Year. Here Is How Much Retirees Will Actually Keep
The Social Security Administration set the 2027 cost-of-living adjustment at 3.6% on Oct. 14, lifting benefits and Supplemental Security Income payments for 76M Americans. It's the largest raise retirees have seen in four years.
The figure came straight from the September inflation report, which showed consumer prices rose 3.7% from a year earlier, up from 3.4% in August. Gasoline did most of the lifting, hitting record levels for the month of September.
Medicare takes a smaller bite this time
For the average retired worker, a 3.6% raise works out to roughly $75 more per month, pushing the typical benefit to about $2,159, per the Senior Citizens League. After the Medicare Part B deduction, the gain shrinks to roughly $68.
The standard Part B premium is projected at $209.50 a month in 2027, up $6.60 from $202.90, according to the Medicare trustees' annual report. The Centers for Medicare and Medicaid Services sets the official number later this fall.
That projected increase would swallow about 9% of the average retiree's raise. Compare that with 2026, when the premium jumped $17.90 and ate roughly one-third of the year's cost-of-living gain.
Critics say the formula misses retiree costs
The adjustment is calculated from the CPI-W, a price index built around the spending of urban wage earners. Medical costs consume nearly 30% of the average Social Security benefit, a share the index doesn't weight heavily.
Older Americans spend twice as much on health as younger workers, and those over 75 spend triple.
Advocacy groups want a switch to the CPI-E, an index designed around spending by people 62 and older, which leans more on medical and housing costs.
"The COLA is not always a perfect reflection of the types of price increases that older people see."
Rich Johnson, AARP Public Policy Institute
The same September inflation print also lands in front of the Federal Reserve, which meets Oct. 28 with core inflation showing signs of moderation.
Recipients with a my Social Security account can view their personal COLA notice online up to three weeks before it arrives by mail, provided they sign up for digital notices by Nov. 18.
