Social Security is raising benefits 3.6% in 2027, averaging $75 more a month for retirees

In January, tens of millions of Social Security recipients will receive a significant increase in their monthly benefits due to a 3.6% cost-of-living adjustment (COLA). This adjustment applies to 71 million Americans, including 54 million retired workers and 9 million of their survivors and dependents. On average, this increase will add about $75 to monthly checks, amounting to $902 per year for typical retired workers, as stated by financial planner Robert Laura.

However, some experts argue that the increase is insufficient when considering rising Medicare premiums and the overall high cost of living. Laura notes that Medicare Part B premiums are deducted from Social Security payments and are expected to rise by $6.60 per month in 2027. Consequently, the actual benefit increase may be closer to just $68 a month, which is quickly consumed by higher fuel, grocery, and medical costs, particularly those that are expected to rise by an average of 5.4% over the next decade.

The Social Security trustees project that the retirement trust fund will run out of money as early as the fourth quarter of 2032, indicating the COLA increase may not be sufficient. Stephanie Akpa, head of policy and public affairs at Atticus, explains that COLA is based on inflation rates from the previous year, meaning beneficiaries face a full year of rising costs before their payments catch up.

This issue is especially challenging for many Social Security recipients with disabilities, who may have to make difficult decisions about paying for medical expenses such as doctor visits, medications, or necessary medical equipment.