Social Security Checks Are Set to Climb by $75, Though Inflation May Offset the Gain

Quick Read

• The Social Security Administration has announced a 3.6% cost-of-living adjustment for 2027, which should raise the average retired worker's monthly check by about $75 beginning in January.

• The COLA is based on CPI-W, a measure that gives less weight to retirees' medical and housing expenses; the Senior Citizens League says benefits have lost 14% of their buying power over the past decade.

• Even so, inflation could climb further and weaken the boost, so retirees concerned about higher prices may want to consider gig work or a part-time job to add income.

Millions of Americans depend on Social Security for monthly income, and many will continue receiving those benefits for years to come. That is why cost-of-living adjustments, or COLAs, remain such an important part of the program.

The goal of a Social Security COLA is to help benefits keep pace with inflation. The Social Security Administration has now announced a 3.6% COLA for 2027, which works out to an average monthly increase of about $75 for retired workers. The adjustment is scheduled to begin in January and should mean larger payments for retirees who need them most.

Still, even a higher benefit may not go as far as expected if inflation stays elevated. The upcoming COLA also highlights a longstanding problem: the current formula does not always match the real-world costs retirees face, since their budgets often differ from those of working-age households.

Benefits are rising, but the increase may not be enough

The 3.6% COLA will lift the average monthly retirement benefit by roughly $75, taking it from about $2,095 to $2,170, according to the SSA. That said, the $75 amount is only an average.

Because COLAs are calculated as a percentage of existing benefits, people with larger monthly checks will generally see a bigger dollar increase, while those with smaller benefits will receive less.

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Even so, a weakness in the COLA formula could make next year's increase less effective. Retirees who rely most heavily on Social Security are likely to feel that shortfall first.

Social Security COLAs are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a government inflation gauge maintained by the Bureau of Labor Statistics. To determine whether benefits need to be adjusted, the SSA compares third-quarter CPI-W readings with those from the previous year.

But CPI-W does not necessarily reflect how older Americans spend their money, especially since many devote a large share of their budgets to healthcare and housing. The nonpartisan Senior Citizens League says Social Security benefits have lost 13.7% of their purchasing power over the past 10 years because of the way COLAs are calculated.

Inflation may keep running hot

The SSA's 3.6% COLA for 2027 is based on inflation readings from the summer, but that does not mean prices will stop rising afterward. If inflation accelerates in the new year, the increase could lose ground quickly.

In the end, the 2027 COLA should provide retirees with some added breathing room. But it does not guarantee that Social Security recipients will be able to afford the same things they could before.

If you are worried the coming COLA will not keep up with inflation, you may want to look for ways to increase your income. Even a few hours of gig work each week could help supplement Social Security benefits and make rising costs easier to manage. If you prefer a set schedule, a part-time job may offer even more stability.

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