Social Security Is Getting a Raise! What the 3.6% COLA Means for You
If you receive Social Security income, you have a little more money coming your way in 2027! The Social Security Administration has officially announced a 3.6% cost-of-living adjustment, better known as COLA, for 2027. Nearly 72 million Social Security beneficiaries will see the increase beginning in January, and the Social Security Administration estimates that the average retirement benefit will rise by about $75 per month.
Now, before anyone starts shopping for a new boat, let’s put that $75 into perspective. That works out to about $900 over the course of a year for someone receiving the average increase. Not exactly a jackpot, but certainly nothing to sneeze at!
Why Are Benefits Going Up?
Social Security COLAs are designed to help benefits keep pace with the rising cost of living. The calculation isn't based on someone's opinion about whether groceries seem expensive or whether your favorite restaurant now wants $18 for a hamburger. The formula is established by law and is tied to changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, as measured by the Bureau of Labor Statistics. For 2027, that calculation produced a 3.6% increase. Let's see what that could look like.
If your current monthly Social Security benefit were:
- $1,500, a 3.6% increase would be about $54 per month
- $2,000, it would be about $72 per month
- $2,500, it would be about $90 per month
- $3,000, it would be about $108 per month
Those are simple calculations. Your actual increase will be based on your individual Social Security benefit. The Social Security Administration estimates that the average retired worker's monthly benefit will go from $2,095 to $2,170, while a couple who both receive benefits will see their estimated average monthly benefit increase from $3,238 to $3,355.
But Wait! Don't Spend It Yet
There's another number those who are 65 and over will want to watch: Medicare premiums. If your Medicare Part B premium is deducted from your Social Security payment, the number you really care about isn't simply your 3.6% raise. It's how much your net Social Security deposit changes after Medicare and any other deductions. In other words, Social Security may be giving you a bigger slice of pie, but we still need to see how much Medicare takes off the plate.
Information about Medicare changes for 2027 will be available through Medicare. For Medicare enrollees using a personal my Social Security account, the 2027 premium amount and benefit information will become available through the Message Center starting in late November, according to Social Security's announcement.
Social Security is also making it easier to find out exactly what your new benefit will be. People with a personal my Social Security account can view their COLA notice online beginning in late November. Social Security says that can be up to three weeks earlier than waiting for the paper notice to arrive. Those who want online access need to create their account and enroll in paperless notices by November 18.
There's More to the 2027 Story Than COLA
The 3.6% increase is getting the headlines, but several other Social Security numbers are changing in 2027.
For example, the maximum amount of earnings subject to Social Security tax increases from $184,500 in 2026 to $192,300 in 2027. The earnings limit for someone who claims Social Security before full retirement age and continues to earn income (from working) also increases, from $24,480 to $25,560. Different rules apply during the year a person reaches their full retirement age.
I always remind people that a COLA isn't really a "bonus." It is intended to help Social Security income keep up with increasing living costs. Still, 3.6% more is certainly better than nothing at all.
When your notice arrives, look at your actual new monthly benefit, your Medicare deduction, and most importantly, the net amount you'll receive. Then take the opportunity to look at the rest of your retirement income plan. If your Social Security income is going up, does the amount you're withdrawing from your IRA need to change? How does it affect your monthly budget? Are there tax consequences to consider?
A $75 monthly increase may not change your retirement plan, but good financial planning is often about paying attention to lots of seemingly small numbers. Over time, those little numbers can add up to Wealth that is always In-Formation!
The Wealth InFormation Lady®
This article is for educational purposes and is not intended as individualized tax, legal or investment advice. Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Sources
Social Security Administration. “Social Security Announces 3.6 Percent Benefit Increase for 2027.” Press Release, October 14, 2026. [ssa.gov]
Social Security Administration. “2027 Cost-of-Living Adjustment (COLA) Fact Sheet.” 2027 Social Security Changes. [ssa.gov]
Social Security Administration. “Social Security Announces 3.6 Percent Benefit Increase for 2027.” Social Security Matters Blog, October 14, 2026. [ssa.gov]
