Can You Make It on the Typical Social Security Payment Without Savings in 2027?

For seniors who depend on Social Security, the latest government increase may bring a bit of relief. The Social Security Administration says beneficiaries will get a 3.6% cost-of-living adjustment, or COLA, for next year.

That increase translates to roughly $75 more per month for the average retired worker. The purpose of the COLA is to help older adults better keep up with inflation.

Here is what several financial experts told MoneyLion about the tradeoff retirees and workers nearing retirement face when they rely on Social Security and whether savings can help fill the gap.

What It Really Means to Live on Social Security

The average Social Security benefit is about $2,000 a month. NewsNation reported that the 3.6% COLA would add about $900 a year for many recipients. But the cost of living where you live can make a major difference in what that income can cover.

“If you live where the cost of living is lower, you can live a modest lifestyle,” said Melanie Musson, finance expert with Quote. “If you live in a higher-cost area, $2,000 a month won’t be enough to support you and you’ll need to seek government assistance.”

At a $2,000 monthly income, some retirees may qualify for low-income senior housing if their area offers it. Such apartments often take up about 30% of income, which would mean paying around $600 a month. If groceries come to about $300 a month and insurance costs about $150, that still leaves a little more than $1,000.

A car payment could easily run about $400 a month, and fuel may add another $100 or more. After utilities, phone service and other routine bills, there may be very little left for nonessential spending. In some locations, the margin would be even smaller.

How Inflation Affects Retirees Without a Cushion

Inflation can hit retirees with no savings especially hard. Prices can rise month after month, while Social Security does not increase on a monthly basis. A working household, by contrast, can look for higher pay, take extra hours or delay retirement.

“Someone living almost entirely on Social Security has fewer options and is more likely to resort to food banks and other community programs,” said Chad Cummings, attorney and certified public accountant at Cummings & Cummings Law. “Retirees absorb those increases from the same check until the next annual COLA takes effect and even then, that is only a half-measure because the COLAs historically lag real inflation numbers.”

Why Running Your Own Numbers Matters

It can be useful to calculate how different Social Security claiming ages fit into your broader financial plan and how each option could affect your income over time.

“Waiting generally means a larger monthly check, while claiming earlier means you start receiving that income sooner,” said David Kon, CEO and founder of WealthFluent. “There isn’t one right answer for everyone. It depends on your health, whether you’re still working, what other income you have and, for couples, your spouse’s situation as well.”