Social Security COLA 2027: 3.6% increase adds $75 a month, but retirees say it’s not enough

The Social Security Administration has projected a 3.6% cost-of-living adjustment (COLA) for older adults and people with disabilities in 2027, translating to an estimated additional $75 a month for beneficiaries. However, some retirees say the increase will do little to offset rising food, healthcare, gasoline and housing costs.

The adjustment will affect nearly 72 million people receiving monthly Social Security benefits and about 7.3 million beneficiaries enrolled in Supplemental Security Income (SSI), according to the announcement.

The projection comes as inflationary pressures weigh on American households and businesses, with the United States also approaching midterm elections. The government reported on Wednesday that the consumer price index rose 3.7% in September from a year earlier, as renewed fighting between the United States and Iran pushed up gasoline prices.

Social Security Administration Commissioner Frank Bisignano said the adjustment would provide beneficiaries with “greater financial stability”.

However, advocates for older Americans argue that rising living costs could erode the value of the increase before it reaches retirees’ pockets.

Nancy Altman, president of the Social Security Works advocacy group, said the latest inflation figures highlighted the limitations of the adjustment.

“As important as the Social Security COLA is, it is not keeping up with prices,” she said.

Why retirees say the $75 monthly increase is not enough

For many older Americans living on fixed incomes, the projected increase comes amid mounting expenses, particularly for healthcare and prescription medicines.

Lorrie Ufkin, a 71-year-old retiree living outside Rochester, Minnesota, said the adjustment would not make a meaningful difference to her household’s healthcare costs.

Ufkin expects her premiums and prescription expenses to rise after a temporary Medicare Part D subsidy programme that has helped offset premiums ends at the close of the year. The Centers for Medicare & Medicaid Services has projected a modest increase for most people, but Ufkin said her household faces steeper costs.

The COLA “doesn’t even meet what they’re going to do for changes to Medicare,” she told The Associated Press.

She said one medication taken by both her and her husband was expected to increase from $11 per month per prescription to $200 per month per prescription.

She described the expected increase as “catastrophic”.

Senior advocacy groups have warned that such expenses could absorb much of the additional money retirees receive through the annual adjustment.

“There’s a lot on the line financially right now for older Americans — one in five have no retirement savings, and more people feel financially insecure this year than last. That makes Social Security’s cost-of-living adjustment critically important,” AARP CEO Dr Myechia Minter-Jordan said.

Retiree returns to work as costs climb

Rising living expenses are also forcing some older Americans to reconsider retirement.

Jaime Jakubczak, a 68-year-old resident of Buffalo, New York, who retired at 55, has recently returned to work to help cover his expenses, particularly rising property taxes.

He said the projected 3.6% COLA would be offset by inflation and a proposed 3.9% property tax increase in his town.

Jakubczak called the adjustment “a pittance”, pointing to the cost of food, healthcare and gasoline.

“We were getting ahead a little bit with the COLA based on inflation, but the inflation is so high that it doesn’t offset what our COLA allowance is,” he said.

His experience reflects concerns among retirees that an increase in monthly benefits does not necessarily translate into greater purchasing power when essential expenses are rising at a similar or faster pace.

AARP poll highlights concerns over purchasing power

Concerns about the adequacy of the adjustment extend beyond individual households.

An AARP poll conducted in September found that about three-quarters of Americans aged 50 and older disagreed with the idea that a 3.5% Social Security COLA in 2027 would be sufficient to keep pace with rising prices.

The findings underscore the financial pressure facing older Americans who depend heavily on Social Security to cover everyday expenses.

The impact of the adjustment will vary from beneficiary to beneficiary, depending on their existing benefits, household expenses and healthcare costs.

Social Security payroll tax wage cap to rise in 2027

The COLA announcement also comes alongside a projected increase in the maximum annual earnings subject to Social Security payroll taxes.

The wage cap is set to rise to $192,300 in 2027 from $184,500 in 2026. Social Security benefits are financed through payroll taxes collected from workers and their employers, subject to the annual earnings limit.

The annual COLA is intended to help benefits keep pace with inflation, protecting beneficiaries’ purchasing power as the cost of goods and services rises.

However, advocates argue that the adjustment may not fully reflect the spending patterns of older Americans, particularly those facing substantial medical expenses.

Social Security faces a long-term funding challenge

Beyond the immediate question of whether the 2027 increase will be sufficient, the programme faces a longer-term funding challenge.

The June 2026 Social Security and Medicare trustees’ report projected that the combined Social Security trust funds, which cover retirement and disability benefits, would be unable to pay full scheduled benefits beginning in 2034 if Congress does not address the funding shortfall.

After that point, incoming revenue would be sufficient to cover about 83% of scheduled benefits, according to the report.

The projection does not mean Social Security payments would stop entirely in 2034. Instead, beneficiaries could face reductions in the amounts payable under the programme if the shortfall remains unresolved.

For retirees already struggling with rising household expenses, the combination of near-term inflation and uncertainty over Social Security’s long-term finances adds to concerns about their financial security.