Social Security’s annual cost-of-living adjustment is coming soon. Here are the states where the biggest hike in years could have the most impact

Social Security's annual cost-of-living adjustment (COLA) is set to increase significantly for the first time since 2023, according to estimates. The official percentage will be released next month, but advocacy groups have projected a 3.5% hike for 2027, with AARP estimating a 3.6% increase. This marks the largest boost in decades, surpassing the previous 2.8% COLA in 2026.

The inflation spike leading to this adjustment is attributed to the ongoing conflict between the U.S. and Iran, as well as the war in Ukraine and its effects on oil prices. The higher cost of living adjustments will have a greater impact on higher-earning beneficiaries, who receive bigger checks each year. New Jersey residents are expected to see the largest increase, with their average monthly benefit rising from $2,071 to about $2,236, a difference of $79-$81.

The wealth concentration among older generations, particularly baby boomers, contributes to increased consumer spending despite high interest rates and inflation.