Social Security Benefits Will Rise 3.6% in 2027—but Some Key Costs Are Rising Faster

The Social Security Administration announced on Wednesday that Social Security benefits will get a 3.6% boost in 2027, after a year of hotter-than-expected inflation.

It's a sharp increase from the 2.8% adjustment beneficiaries received for 2026 and the largest bump since 2023, when benefits rose 8.7%.

Even so, senior advocates are warning that it is too little too late.

“Another year, another COLA that falls short of expectations," Shannon Benton, executive director of The Senior Citizens League (TSCL), said in a statement on Wednesday. “The reality is that millions depend on Social Security to retire with dignity, and today’s announcement puts that ideal in jeopardy for millions.”

The adjustment will add about $75 per month to the average retired worker’s check starting in January, with the average monthly benefit rising from $2,095 before the adjustment to $2,170 afterward.

Social Security calculates its annual cost-of-living adjustment by comparing the average CPI-W reading for July, August, and September with the average for the same three months a year earlier. This year, the index was up 3.4%, 3.5%, and 3.9%, respectively, from a year earlier.

How rising prices are hitting housing hard

A $75 monthly increase is substantially more than retirees might have expected at the beginning of the year. In January, TSCL projected a 2.5% COLA for 2027 before inflation accelerated as fuel prices surged following the outbreak of the Iran war.

But the larger check reflects a less welcome development: Inflation heated back up. Overall consumer prices were 3.7% higher in September than a year earlier, according to the Bureau of Labor Statistics (BLS), while the CPI-W used to calculate Social Security's adjustment rose 3.9%.

That acceleration comes at a precarious time for many older Americans.

AARP CEO Myechia Minter-Jordan said on Wednesday that “there’s a lot on the line financially right now for older Americans,” noting that 1 in 5 has no retirement savings and that financial insecurity has grown.

AARP's own polling suggests many older Americans were already skeptical that a raise of this size would be enough. In a September survey, 76% of adults aged 50 and older said a projected 3.5% COLA would not keep pace with rising prices; just 23% said it would.

“Many seniors are telling us the same thing: As inflation picks back up, life still does not feel affordable,” Benton said earlier this spring. “The average senior already lives on much less than younger Americans, according to the [U.S.] Census Bureau, and our supporters constantly tell us they feel like they’re falling farther and farther behind.”

Nowhere is that strain more obvious than in the housing market, as seniors on fixed incomes fight growing tax, insurance, and utility burdens—all of which rose faster than inflation and the COLA adjustment in 2025 and threaten to do the same this year.

Property taxes are one such example. Across the U.S., the average homeowner paid $4,427 in property taxes last year, up 3% from 2024, according to an analysis from real estate data firm ATTOM. That increase alone outpaced the 2.5% COLA beneficiaries received for 2025.

Insurance is another growing pressure point. The average homeowners insurance premium is expected to rise 4% in 2026, after jumping 12% in 2025, according to Insurify—again outpacing recent Social Security adjustments.

Utilities are moving in the same direction, too. Electricity prices rose 4.4% higher in September than a year ago, according to the BLS, while utility gas prices rose 5%—both well above the broader inflation rate and the 2027 COLA.

Those national figures tell a troubling story, even while masking larger regional variations. In some parts of the country, residential electric bills have risen much faster—like in West Virginia, where the average price of electricity for residential ratepayers has risen by nearly 34% since 2019.

It’s a clear illustration of how even bigger checks can still feel like a pay cut, and why some senior advocates are calling for a radical rethinking of how Social Security benefits are calculated.

Why COLAs can miss seniors' real costs 

COLAs are designed to help Social Security benefits catch up after prices rise, but that catch-up mechanism has limits.

For one, the overall inflation rate smooths together dramatic and sometimes temporary price swings across many categories of spending. Energy prices have played an outsize role this year, as the war with Iran upended global oil markets.

Gasoline prices jumped 9.1% in September alone on a seasonally adjusted basis and were 34.2% higher than a year earlier, according to the BLS. The gasoline increase accounted for more than half of September's overall monthly inflation, while energy prices overall climbed 5.2% for the month and 20.4% over the year.

Those swings can ripple through the economy, raising or lowering the cost of producing and transporting everything from groceries to household goods.

It's a level of nuance that shapre retirees' budgets, even while headline inflation numbers gloss over it, according to Benton’s organization.

The issue is the metric itself. The CPI-W—a narrower cut of the CPI-U, which COLA is pegged to—tracks urban wage earners and clerical workers. This means it can underweight costs that often take up a larger share of older Americans’ income, especially medical care and housing.

That’s why TSCL has advocated for indexing the COLA to the Research Consumer Price Index for Americans aged 62 and older, or R-CPI-E—an experimental BLS index that weights these categories more in line with older Americans’ spending patterns.

While a broad look at the index shows overall CPI, CPI-E, and COLA adjustments trend largely in lockstep, a closer look at the past five years shows sharp divergence starting in 2022, when the COLA dropped below both CPI and the CPI-E, regaining ground only in 2025.

The most recent release from the R-CPI-E offers an even starker look. In April, overall costs for Americans 62 and older were up 3.8% from a year earlier—roughly in line with the broader CPI-U reading. But two of the categories that matter most to retirees charged even further ahead as housing costs rose 3.9% and transportation jumped 6.8%.

That's to say nothing of medical care costs, which have long outpaced all other categories of spending.

“For retirees living on fixed incomes, the costs that matter most, especially healthcare, housing, utilities, and insurance, continue to rise faster than prices in the rest of the economy, silently wrenching seniors dry,” Benton said. “This makes the national affordability conversation even more important than ever.”

TSCL estimates that a senior who filed for Social Security with average benefits 30 years ago would have received nearly $14,000 more in retirement if the CPI-E had been used.

It's a significant claim in today's environment. The 2027 COLA is still preliminary, with the official announcement scheduled for October. But until then, seniors are left with the same uneasy reality: A bigger COLA may be coming, but so are the costs that could quickly eat it up.