Social Security Just Announced a Cost-of-Living Increase for 2027—Here’s How Much Will Be in Those Checks
Social Security provides a lifeline for millions of people every month. And it’s not just retirees, though many older people rely on these monthly stipends. Younger people are also directly affected by Social Security news, whether they’re getting close to retirement, taking care of their parents or grandparents, or working with people who receive these benefits.
In fact, anyone who works and pays into Social Security, which is primarily financed through payroll taxes, has reason to pay attention to the latest news coming out of the Social Security Administration (SSA). Every year around this time, the SSA reveals the annual cost-of-living increase that will appear on the monthly checks—and you’ll definitely want to pay attention to this latest change.
The 2027 benefit-increase announcement couldn’t have come at a better time. Inflation is high, gas prices are way up and Americans of all ages are feeling the pinch. The increase will apply to both regular Social Security payments as well as Supplemental Security Income (SSI), which provides cash to people of any age who are blind, have disabilities or have limited sources of income.
So how much will this year’s increase be, and who will benefit? Will it make a dent in your retirement costs? And if you’re still many years away from that happy day, how can you make sure you’re planning for the future? Read on to find out and get some important advice from Social Security, retirement and money experts.
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What is the Social Security cost-of-living increase, exactly?
The cost-of-living increase is just what it sounds like—adjustments to Social Security payments based on increased costs of basic expenses.
“The cost-of-living adjustment, or COLA, was enacted by Congress as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975,” explains Kevin Walton, a registered Social Security analyst certified by the National Association of Social Security Analysts. “Before that, benefits were increased only when Congress enacted special legislation.”
Since then, COLA has become something all beneficiaries count on each year. “The Social Security cost-of-living adjustment is an annual increase to every recipient’s benefits based on the change in the consumer price index over the past year,” says certified financial planner Stephen Kates, the principal financial analyst for the site RetireGuide.
How much is the latest increase?
The just-announced increase for 2027 will be 3.6%, which is the biggest jump since 2023. Individual amounts will depend on what your numberq is currently, but the SSA says the average increase will be about $75 per check.
How can you calculate how big your check will be?
Current retirees or recipients can take the gross monthly amount on their check and multiply it by 1.036 to determine 2027’s payments. This will give you your new gross check amount.
Here’s an example: Let’s say your 2026 monthly gross payments are $2,000. Multiplying $2,000 by 1.036 gives you a new total of $2,072. You can also determine the increase alone by multiplying $2,000 by 0.036 (aka 3.6%), which comes to $72.
For younger folks who haven’t yet started receiving Social Security, you can determine your eligible benefits by creating an account on SSA.gov, says Kates.
When will people receive this extra money?
For the nearly 72 million regular Social Security recipients, the SSA will start sending checks with the new amounts in January 2027. For those on SSI, which is about 7.3 million people, the adjustment will start on Dec. 31, 2026.
How can you stretch your retirement dollars?
It can be tough. According to Amie Clark of The Senior List, a website focused on aging-related consumer news, nearly 30% of retirees are not confident they’ll be able to maintain their current lifestyle throughout retirement. “The most unexpected financial challenges for retirees [are] inflation and rising living costs, followed closely by medical and health-care expenses and home-repair and maintenance costs,” she says.
Here are some expert-approved strategies to help stretch your retirement dollars or save money at any age.
Manage cash flow
Managing cash flow is important for everyone, but for retired folks, limiting spending to only what is coming in from Social Security, investments and part-time jobs is critical. “Maintain a budget for your spending, and plan ahead for future spending,” Kates advises.
Then focus on saving. After all, it’s much less stressful to save for a rainy day than spend sleepless nights worrying about debt from impulse purchases. When you have a little extra, save it if you can. “In years when investments are performing well, emergency funds can be boosted,” he says. “These will be important for years when your investments perform poorly and will offer you assets to draw from with little risk or tax consequences.”
Be a savvy consumer
There’s a rush that comes with shopping and getting new things, but in some cases, you can refresh what you have, which is also good for the environment. “In day-to-day spending, capitalize on opportunities to save on the everyday things you plan to do anyway,” Kates suggests. “Credit card rewards, rebates, home-maintenance tax rebates and more are all available to retirees who seek them out.”
Look at your fixed expenses
It’s a good idea to look at your fixed expenses, make sure they’re really “fixed” and see if you can cut costs without too much sacrifice. “This can include reevaluating your auto and home insurance or eliminating the number of times you eat out each week,” says Chuck Czajka, a certified Social Security claiming strategist and the founder of Macro Money Concepts in Stuart, Florida.
Be careful with the credit cards
Although debit cards come with their own risks, you want to be mindful of how much you’re charging. “When it comes to credit cards, keep usage to a minimum,” Czajka advises. “If you do make credit card charges, ensure you pay them off in full at the end of each month.”
Get a good investment advisor or accountant
You may think you can manage your finances on your own, but it can be helpful to have an investment advisor or accountant help you with the big picture. You might even find that saving money can be a fun challenge! “There may be opportunities to plan withdrawals or asset sales in certain years to minimize future taxes or take advantage of certain allowable tax credits or deductions,” Kates says. A financial advisor or accountant can help you with that.
Delay retirement
Nobody really wants to significantly delay retirement, but holding off on getting your Social Security benefits is a wise move. “For those who have not yet retired or claimed Social Security benefits, waiting until full retirement age or later can significantly increase retirement income,” Kates says. “If benefits are delayed, payments will increase by roughly 8% per year until age 70.”
Always read the fine print
Whether you’re dealing with long service agreements or cellphone contracts and bills, it’s critical to read the fine print. If you feel like you’re reading gobbledygook, you’re not alone. But ask a trusted relative or friend to help you. When all else fails, hire a lawyer.
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Sources:
- Social Security Administration: “Social Security Announces 3.6 Percent Benefit Increase for 2027”
- Associated Press: “Social Security recipients to get 3.6% cost of living boost, an average of $75 per month”
- Amie Clark, co-founder and editor-in-chief of TheSeniorList.com; email interview, Oct. 14, 2024
- Kevin Walton, NARSSA-certified registered Social Security analyst and coach at C2 Financial; email interview, Oct. 16, 2024
- Stephen Kates, principal financial analyst for RetireGuide; email interview, Oct. 16, 2024
- Chuck Czajka, certified Social Security claiming strategist and the founder of Macro Money Concepts; email interview, Oct. 15, 2024
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