Social Security Raise of 3.6 Percent for 2027 Is the Largest in Four Years

Social Security benefits will rise 3.6 percent next year, the Social Security Administration announced Wednesday, giving more than 75 million Americans their largest cost-of-living adjustment in four years as inflation picks up again.

The increase will lift the average monthly retirement benefit by about $75, to roughly $2,170, starting in January. It is larger than the 2.8 percent adjustment beneficiaries received this year. About 7.3 million people who receive Supplemental Security Income will see the higher payments beginning Dec. 31.

The adjustment is set by law using a version of the consumer price index for urban wage earners, averaged over July, August and September. The broader consumer price index released the same morning showed prices up 3.7 percent from a year earlier in September, driven largely by gasoline.

Advocates for older Americans welcomed the bigger raise but said it would not undo years of falling behind. Shannon Benton, executive director of the Senior Citizens League, which estimated the average increase at about $75.15 a month, said the raise “provides a little breathing room but won’t undo the damage of what we’ve seen this decade,” NBC News reported. Nancy Altman of the advocacy group Social Security Works said the adjustment, however important, is not keeping up with prices.

Many advocates argue the formula itself is the problem, because it tracks the spending of working households rather than retirees, who devote more of their budgets to medical care, prescription drugs, rent and home energy. Max Richtman of the National Committee to Preserve Social Security and Medicare favors switching to an index designed to measure older Americans’ costs. Changing the formula would take an act of Congress, and Benton said such a reform was unlikely to pass until lawmakers take up a broader overhaul of the program.

Part of the increase may be absorbed by Medicare. Premiums for Medicare Part B, which are usually deducted directly from Social Security checks, have not yet been announced for 2027.

The larger question hanging over the program is its long-term financing. Social Security’s retirement trust fund is projected to run short in about six years, and without action from Congress, beneficiaries would face an automatic cut of more than 20 percent in 2032.

Supporters of the current system can point out that the adjustment is doing what it was built to do: it follows measured inflation, and this year’s figure is the most generous in four years. For the roughly 44 percent of older adults who rely on Social Security for all of their income, according to figures cited by NBC News, the size of that raise matters a great deal.