Social Security recipients will receive a 3.6% cost-of-living increase in 2027

Social Security recipients will receive an annual cost-of-living adjustment next year of 3.6%, one of the largest increases this decade. But advocates say it’s still unlikely to go far enough for many struggling seniors.

It’s the largest adjustment since 2022, and will amount to an additional $75.15 per month on average, according to the Senior Citizens League, an advocacy group for older Americans.

Elevated inflation continues to bedevil the U.S. economy, with rising energy and gas prices sparked by wars in Iran and Ukraine as the primary culprits. Yet even without the added cost of gas, so-called core inflation — which excludes volatile energy and food prices — has remained stuck at about 2.5%, well above the Federal Reserve’s 2% target.

For senior citizens, who are the majority of Social Security retirement benefit recipients, next year’s increase will be welcome, but it will still come up short given rising costs, said Shannon Benton, the league’s executive director.

“Seniors have spent years watching their expenses outpacing their benefits,” Benton said. “This provides a little breathing room but won’t undo the damage of what we’ve seen this decade.”

The league found in a survey that 89% of older Americans thought the cost-of-living adjustment that kicked in this year, 2.8%, was inadequate given rising costs in the economy. About 44% of seniors draw all their income from Social Security, the survey found.

The annual adjustment is typically calculated using inflation data from July, August and September. But it uses an obscure inflation index that advocates say doesn’t accurately reflect seniors’ spending priorities, which include more medical and prescription drug costs, as well as a greater likelihood that they will pay rent and generally higher home energy costs.

Those categories have historically outpaced headline inflation, though the rate of medical-cost increases has slowed recently. One reform proposal would index the annual adjustment to more precisely reflect seniors’ needs — but Benton said it is unlikely to be adopted until all of Social Security is overhauled.

“They need Social Security benefits to cover the cost of living, and it’s just not happening,” she said.