From Kiplinger · · 1m 50s
2027 Social Security COLA Set at 3.6%
Social Security's 2027 cost-of-living adjustment will rise 3.6% for retirees, matching economist David Payne's estimate.
In brief
Social Security's 2027 cost-of-living adjustment will rise 3.6% for retirees, matching economist David Payne's estimate. Social Security's 2027 COLA increases to 3.6% to preserve purchasing power for retirees. Originally reported by Kiplinger.
2027 Social Security COLA
The Social Security Administration announced a 3.6% cost-of-living adjustment for 2027, matching economist David Payne's final estimate.
Monthly Impact for Retirees
The average retiree will receive an additional $75 per month, raising their January 2027 payment to $2,170 from $2,095.
Married Couples' Benefits
Married couples will see an average increase of $117, raising their monthly benefit to $3,355 from $3,238.
COLA Context
The 3.6% increase is 0.8% higher than 2026's 2.8% and near the long-term historical average of 3.8% since 1975.
Economist's Rationale
David Payne, Kiplinger's staff economist, projected 3.6% due to high energy prices bleeding into other categories.
“high energy prices bleed into other categories”
Inflation Data
September's inflation numbers showed gasoline prices rose 9.1%, accounting for over half of the monthly all items increase.
“the index for gasoline rose 9.1 percent in September”
Retirees' Perspective
Martha Shedden, co-founder of the National Association of Registered Social Security Analysts, says retirees shouldn't interpret higher COLAs as more spending money.
“Retirees shouldn't interpret a higher COLA as having more spending money”
Historic COLA Trends
The COLA hit a low of 0.0% in 2016 and surged to 8.7% in 2023, with the biggest increase at 14.3% in 1980.
“the biggest COLA increase was 14.3% back in 1980”
Earnings Test Details
The SSA withholds $1 of benefits for every $2 earned over $25,560 in 2027, raising monthly withholdings to $2,130.
“the SSA temporarily withholds $1 of your benefits for every $2 earned over $25,560”
Social Security Tax Cap
The 2027 Social Security tax wage cap is $192,300, up $7,800 from 2026's $184,500.
“the new Social Security tax limit is $192,300 in 2027”
COLA Calculation Method
The COLA is calculated using the CPI-W for the third quarter, with the 2027 figure derived from July, August, and September 2025-2026 data.
“The COLA is now determined by the inflation observed in July, August, and September in the CPI-W”
What Happens Next
Retirees will see their benefits adjusted for inflation in 2027, preserving purchasing power without increasing actual spending.
“the objective is preservation of purchasing power, not an increase in purchasing power”
The bottom line
Social Security's 2027 COLA increases to 3.6% to preserve purchasing power for retirees.
