Social Security’s 2027 COLA: Retirees in These 10 States Will Get the Largest Raise Next Year

The Social Security program undergoes several important changes each year, but the most anticipated is the cost-of-living adjustment (COLA). Annual COLAs protect the purchasing power of benefits by ensuring they increase at the same pace as inflation. The Senior Citizens League (TSCL) estimates that benefits will increase 3.5% next year. But the Social Security Administration will not announce the official COLA until Oct. 14, shortly after the Labor Department releases September inflation data. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue » All Social Security payments will increase by the same percentage next year, but the extra income will vary widely when measured in dollars. Read on to see the 10 states in which retired workers will receive the largest COLAs in 2027. Image source: Getty Images. How Social Security’s cost-of-living adjustments (COLAs) are calculated Social Security’s annual cost-of-living adjustments (COLAs) are based on changes in a subset of the CPI (Consumer Price Index) known as the CPI-W. Specifically, the CPI-W from the third quarter (July through September) of the current year is divided by the same number from the prior year, and the percent increase becomes the COLA in the following year. The Social Security Administration then multiplies current benefit amounts, inclusive of Medicare premiums automatically subtracted, by the COLA and rounds the product to the next lower dime to find the new benefit amounts. For instance, the COLA was 2.8% this year, so retired workers who received $2,000 per month in 2025 would receive $2,056 per month in 2026. Importantly, while everyone gets the same COLA in percentage terms, retirees with larger benefits receive larger COLAs in dollar terms. Accordingly, retirees who live in the 10 states with the highest median Social Security benefits will see the largest pay increases next year, regardless of what the official 2027 COLA turns out to be. Retired workers in these 10 states will receive the largest COLAs in 2027 The chart below shows the 10 states with the highest median Social Security benefit for retired workers as of December 2025. Story Continues Data source: Social Security Administration. Importantly, state of residence has no direct impact on how much income retired workers receive from Social Security, but there is an indirect correlation. Benefits are calculated based on lifetime income and claim age, so it stands to reason that states with high median incomes are likely to have high median Social Security benefits, too. Indeed, six states listed above — New Jersey, New Hampshire, Maryland, Washington, Massachusetts, and Utah — rank among the 10 states with the highest median income. And workers in three other states listed above — Connecticut, Delaware, and Minnesota — have median incomes above the national median. What about Michigan? It ranks among the 10 states with the highest median Social Security benefits, but its median income is below the national median. That could mean more workers in Michigan claim Social Security at older ages, resulting in larger benefits than in other states. It could also mean workers from states with higher median incomes choose to retire in Michigan. Here’s the bottom line: Social Security benefits are not directly linked to where a retired worker lives, so moving to a different state will not magically make your benefit larger. Instead, workers earn more money in certain states, generally because the cost of living is higher, and those individuals are awarded larger Social Security payouts when they retire, as benefits are based in part on lifetime earnings. The $23,760 Social Security bonus most retirees completely overlook If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $23,760 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Many Americans leave money on the table in retirement. Learn more about these retirement strategies and more, available when you join Stock Advisor. View the “Social Security secrets” » The Motley Fool has a disclosure policy. Social Security’s 2027 COLA: Retirees in These 10 States Will Get the Largest Raise Next Year was originally published by The Motley Fool View Comments