4 Groups Likely to See the Biggest Boost from Social Security's 2027 COLA

The announcement of the 2027 cost-of-living adjustment, or COLA, signals higher Social Security benefits next year. The increase is meant to help benefits keep pace with inflation and preserve purchasing power for nearly 72 million Social Security beneficiaries and about 7.3 million people who receive Supplemental Security Income, or SSI. Still, some people will see a bigger advantage than others.

Here’s a closer look at how the COLA works, who is likely to gain the most, and what it could mean for your own benefits.

How the COLA affects benefits

The Social Security Administration announced a 3.6% COLA for 2027. That figure is based on third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers data. Under that adjustment, the average retired-worker benefit is expected to rise from $2,095 in 2026 to about $2,170 in 2027.

Benefits do not rise by a fixed dollar amount for everyone. Instead, they increase by the same percentage as the COLA. In this case, that means a 3.6% bump, so the size of a person’s current benefit determines how large the increase will be.

As a result, some groups are positioned to see more from the adjustment than others.

High lifetime earners and people who delayed claiming

People with larger monthly checks will generally get larger COLA increases. For instance, a $1,500 benefit would rise by about $54 a month, while a $2,000 benefit would go up by about $72.

Because Social Security benefits are tied to earnings, with the formula using up to 35 years of indexed earnings, higher earners tend to receive larger monthly payments. That means they also stand to receive a bigger dollar increase from the COLA than people with smaller checks.

Those who waited to claim benefits may also come out ahead. People who delay claiming past full retirement age earn delayed retirement credits, which boost monthly payments by about 8% for each year they hold off. Benefits stop growing once someone reaches age 70, but even a one- or two-year delay can produce a noticeably larger check, and that larger base amount leads to a bigger COLA increase.

Beneficiaries not enrolled in Medicare

Higher Medicare costs can quickly offset part of a COLA increase. For example, the Medicare Part B premium is projected to rise by $6.60 to $209.50 a month in 2027. Because Part B premiums are deducted directly from Social Security benefits, the increase may be partly absorbed before recipients ever see it.

Other health-care costs could also move higher. Although the Centers for Medicare & Medicaid Services projects that average Medicare Advantage premiums may decline in 2027, an analysis of CMS data found that premiums may increase in 19 states.

People with other health insurance coverage may avoid those Medicare-related cost increases and keep more of their COLA gain.

SSI recipients

SSI recipients may get a slight timing advantage. Social Security beneficiaries should begin seeing the COLA increase in January 2027, while SSI recipients are expected to receive it a little earlier, on December 31, 2026. Some people who receive both Social Security and SSI could see both benefits adjusted upward.

Survivors and spouses

Survivors and spouses can also benefit because the COLA applies to survivor and spousal benefits in the same way it applies to workers’ benefits.

People who may gain the least

Some beneficiaries may see less of a benefit from the COLA. Those facing a large increase in Medicare Part B premiums could have much of their raise swallowed up by that expense. The effect may be even more noticeable for lower-income people, since they often start with smaller checks and therefore receive a smaller COLA increase in dollar terms.

Households whose income rises enough to cross an Income-Related Monthly Adjustment Amount, or IRMAA, threshold or a benefit-taxation threshold may also see limited gains. In some cases, up to 85% of Social Security income can be taxable. If income increases, a recipient may owe additional tax on those benefits, which reduces the net value of the COLA.

The IRMAA surcharge, which can be added to Medicare Part B and Part D premiums, may also affect higher-income Medicare enrollees. If their income crosses certain limits, the added premium costs can further reduce the value of the increase.

Bottom line

The COLA raises benefits for all eligible recipients, but not everyone will feel the impact equally. To see how the adjustment affects your own payments, you can log in to your my Social Security account in late November to view a COLA notice showing your 2027 benefit amounts. If you have not signed up for paperless notices, the notice will arrive by mail in December.

Once you know your updated Social Security amounts, it may be a good time to review your budget and retirement plan and make any needed adjustments.

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