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

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

The adjustment will affect nearly 72 million people receiving monthly Social Security benefits and about 7.3 million Supplemental Security Income (SSI) recipients, 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 “greater financial stability” for beneficiaries.

But advocates for older Americans say the rising cost of living 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 data pointed to a limitation of the adjustment.

“As important as the Social Security COLA is, it doesn’t keep up with prices,” she said.

Why retirees say the $75 monthly increase isn’t enough

For many older Americans living on fixed incomes, the projected increase comes amid rising costs, particularly for health care and prescription drugs.

Lorrie Ufkin, a 71-year-old retiree who lives outside Rochester, Minn., said the adjustment won’t make a significant difference in her household’s health care costs.

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

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

She said one drug she and her husband took was expected to increase from $11 a month per prescription to $200 a month per prescription.

She described the expected increase as “catastrophic”.

Seniors advocacy groups have warned that such spending could absorb much of the extra money retirees receive through the annual adjustment.

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

Retirees return to work as costs rise

The rising cost of living is also forcing some older Americans to rethink retirement.

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

He said the projected 3.6% COLA will be offset by inflation and his city’s proposed 3.9% property tax increase.

Jakubczak described the adjustment as a “swimming pool” and pointed to the price of food, healthcare and gasoline.

“We got a little ahead with the inflation-based COLA, but inflation is so high that it doesn’t offset our COLA allowance,” he said.

His experience reflects concerns among retirees that increases in monthly benefits do not necessarily translate into greater purchasing power when basic expenses are rising at a similar or faster rate.

AARP survey highlights concerns about purchasing power

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

An AARP poll conducted in September found that about three-quarters of Americans age 50 and older disagreed with the idea that Social Security’s 3.5% COLA in 2027 would be enough to keep up with rising prices.

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

The impact of the adjustment will vary for individual beneficiaries depending on their existing benefits, household expenses and health care costs.

The Social Security payroll tax cap will increase in 2027

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

The wage cap is set to increase to $192,300 in 2027 from $184,500 in 2026. Social Security benefits are funded by payroll taxes collected from workers and their employers, subject to an annual earnings cap.

The annual COLA is intended to help benefits keep pace with inflation and protect recipients’ purchasing power when prices for goods and services rise.

But advocates say the adjustment may not fully reflect the spending patterns of older Americans, especially those who face significant health care costs.

Social Security faces a long-term funding problem

In addition to the immediate question of whether the 2027 increase will be sufficient, the program faces a long-term funding challenge.

A June 2026 report by the Social Security and Medicare administrators projected that the combined Social Security trust funds, which cover retirement and disability benefits, would not be able to pay full scheduled benefits starting in 2034 unless Congress addressed the funding shortfall.

After that point, revenue would be enough to cover about 83% of planned benefits, according to the report.

The projection does not mean that Social Security payments would stop entirely in 2034. Instead, recipients could face a reduction in the amounts owed under the program if the shortfall remains unresolved.

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

Read also | $90 Social Security Checks: Why Trump Is Sending Money to Millions of Seniors