Social Security’s COLA will be 3.6% in 2027 as inflation persists

On October 14, the U.S. Bureau of Labor Statistics announced the final data required to determine Social Security's 2027 cost-of-living adjustment (COLA). Retirees, individuals with disabilities, and survivors of deceased workers will see their monthly benefits increase by 3.6% in 2027—a raise that ranks fifth-largest among the last 35 years.

This COLA represents the sixth consecutive year with increases of at least 2.5%, a feat not seen since 1988 to 1997. For the typical retiree, this equates to an additional $75 per month in 2027. However, the story does not end here. While Social Security beneficiaries are set to receive one of the largest raises since 1993, the story takes a different turn for traditional Medicare recipients.

Medicare Part B premiums typically come out of a retiree's Social Security payment. Over the past few years, these premium increases have outpaced Social Security's COLA. However, the projected 3.25% increase in Part B premiums for 2027, compared to the 3.6% COLA, marks the first time since 2023 that Social Security's COLA will exceed the Part B premium increase.

This silver lining could mean that tens of millions of traditional Medicare recipients will be able to retain more of their COLA increase rather than losing it to higher monthly Part B premiums.