The 2027 Social Security COLA Is Official. Here’s How Much the Average Retiree’s Check Will Rise

Quick Read

• The Social Security Administration announced a 3.6% COLA for 2027, boosting the average $2,088 benefit by $75 per month.

• Medicare Part B premium hikes will reduce that raise dollar-for-dollar before retirees see any net gain.

• Social Security benefits have lost an estimated 14% of buying power since 2016, as the CPI-W tracks workers’ costs, not seniors’.

• Building a portfolio and living off one are two completely different skills, and almost nobody teaches the second. This problem is what The Definitive Guide to Retirement Income helps, and it is free today. Read more here. (Sponsor)

If you’re among the Social Security recipients who were hoping your 2027 cost-of-living adjustment, or COLA, would be significant, there’s good news. The Social Security Administration just announced that the 2027 COLA will be 3.6%. Compared to the 2.8% raise benefits got earlier this year, that’s a huge difference.

If you collect an average Social Security check, your benefits may get a decent boost in the new year. But it’s important to take that number with a grain of salt.

The average Social Security check gets a $75 bump

The average Social Security retirement benefit today is $2,088, so a 3.6% COLA boosts the typical benefit by $75 per month. On an annual basis, that’s an additional $900.

Of course, it’s too soon to calculate your actual raise if you’re enrolled in Medicare. That’s because seniors who are on Medicare and Social Security pay for Part B out of their monthly benefits.

If the cost of Part B increases in the new year, that’s going to come out of your COLA directly. A $10 Medicare Part B hike, for example, will reduce the typical COLA from $75 to $65. We don’t know when an official Part B number will be announced, but last year, seniors had to wait until mid-November.

Will the 2027 COLA actually hold up?

The purpose of Social Security COLAs is to help benefits keep pace with inflation. But whether the upcoming COLA can actually do that is questionable.

——

Now Available: The Definitive Guide to Retirement Income

Many successful investors eventually reach the same moment. The saving is done, the portfolio is built, and the question quietly changes from how much can I grow this to how much can I take out? Get that second question wrong and decades of good investing can come apart in a handful of years.

That is exactly what The Definitive Guide to Retirement Income  helps answer. It covers what your retirement could actually cost, which income sources are worth using, and the withdrawal math that decides whether the money lasts. It is free today from Fisher Investments. Read More Here ›

——

Part of the problem boils down to how Social Security COLAs are calculated. They’re based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, during the third quarter of the year. When there’s an increase in the CPI-W, benefits get a COLA. No increase, and benefits stay where they are.

But the CPI-W does not accurately reflect the costs seniors on Social Security incur. The index measures changes in the costs workers incur, which tells a different story.

Even though Social Security has received some generous COLAs over the past decade, benefits have lost an estimated 13.7% of their buying power since 2016, according to the nonpartisan Senior Citizens League. The reason is that seniors’ real-world costs rose faster than the CPI-W during that period.

For this reason, it’s important to have realistic expectations about your upcoming COLA. You may be excited to see your Social Security checks get a nice boost. But if you collect an average benefit and your actual costs increase to the point where you’re spending more than $75 extra per month in 2027, you won’t be in a better financial situation. You could easily, in fact, end up in a worse one.

That’s why you should take steps to improve your finances in 2027 beyond just waiting for the upcoming COLA to hit your Social Security checks. Shedding expenses where you’re able to, relocating strategically, and finding part-time work you can manage could all help you stretch your benefits further and potentially reduce some of the financial stress you’ve been experiencing.

Released: The Definitive Guide to Retirement Income

(Sponsor) Most people spend their entire working lives focusing on one thing: growing a pile of money. Then they retire and discover the skill they actually need is close to the opposite. Turning that pile into steady income, year after year, through good markets and bad, without ever running out.

It may be the least discussed and most consequential transition in personal finance, and plenty of otherwise careful investors walk into it with no real plan. That is exactly what The Definitive Guide to Retirement Income helps answer. It is a free guide from Fisher Investments covering what your retirement will really cost, where the cash flow should come from, and how much you can safely withdraw each year. Learn more here. Learn More Here ›

Contact editorial@247wallst.com for any questions or corrections.