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The Social Security Administration (SSA) announced Wednesday morning that the annual Social Security cost-of-living adjustment (COLA) for 2027 will be 3.6 percent, on the higher end of what most experts predicted.
According to the Committee for a Responsible Federal Budget (CRFB), the 3.6 percent COLA figure “will boost average benefits by about $900 per retiree but would provide an over $2,200 increase” for the highest-earning beneficiaries. Couples in the highest income bracket will enjoy a $3,600 combined increase, bringing their combined benefits above $100,000 annually.
Wondering how the new COLA fits into your overall retirement income plan? RoseMark Advisors, AMAC’s financial planning division, is offering AMAC members a complimentary retirement income strategy session. Schedule Time For Your Income Strategy Session Today
Social Security’s COLA is based on a government measure called the CPI-W, which tracks prices paid by working households for everyday goods and services as measured by the Bureau of Labor Statistics (BLS). SSA compares the average reading for July, August, and September with the same three months in the last year that produced a COLA. The percentage increase, rounded to the nearest tenth of a percent, becomes the benefit increase. If there is no increase, benefits stay the same.
2027 will be the 52nd automatic COLA adjustment since the Social Security Amendments of 1972 became law, requiring annual calculations to begin in 1976. The 2027 COLA will mark the sixth consecutive year in which beneficiaries receive an increase of at least 2.5 percent. The average COLA was 2.6 percent from 2000 through 2027 and 3.4 percent over the past decade, making the 3.6 percent adjustment part of an upward trend. Although the increase will help seniors offset some rising costs, it follows price increases already built into the market.
Wednesday’s announcement comes following reassurances from Social Security Administrator Frank Bisignano on Tuesday that the program will be around for “another 90 years.” Bisignano called the COLA a “good day” for retirees and reaffirmed his commitment to addressing the looming solvency issue. This year’s Trustees report found that the program's Old-Age and Survivors Insurance (OASI) retirement trust fund is projected to deplete its reserve assets in late 2032 unless changes are made.
Medicare Premiums Also Set to Rise in 2027
The net increase Social Security beneficiaries receive must account for the 2027 Medicare Part B premium, projected in the 2026 Medicare trustees report to rise by $6.60 to $209.50. As a result, for those with Medicare Part B premiums deducted, an average beneficiary’s January payment is expected to reflect a net increase of 3.3%.
Readers who have questions about Medicare costs for the coming year can contact AMAC’s Medicare Advisory Service for help. Knowledgeable Medicare advisors are prepared to answer questions about Medicare premiums, coverage options, and potential changes to your healthcare costs.
Contact AMAC’s Medicare Advisory Service today for free, personalized guidance to help you make informed decisions about your Medicare coverage.
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