According to experts' estimates, millions of Social Security recipients in the United States may see cost-of-living adjustments higher than the average by 2027 ( COLA ).
The U.S. Social Security Administration is expected to announce the COLA for 2027 on Wednesday, along with the release of new government inflation data. Social security experts estimate that next year's COLA could see a benefit increase of 3.5% to 3.6%, which would be the largest increase in three years.
However, even if the increase is higher than the average level, recipients may still find it difficult to cover their daily expenses.
A survey released on Monday by AARP shows that more than three-quarters, or 76%, of adults aged 50 and above believe that the anticipated 3.5% adjustment to social security living costs in 2027 is not sufficient to cover their expenses. The survey was conducted from September 17 to 21 and involved 1,023 adults aged 50 and above, with a margin of error of 4.25%.
"I would be very happy if the cost of living were to increase more generously," said Donna Dalrymple, a 70-year-old retiree from Manchester, New Hampshire.
Dalrymple said that she retired at the age of 65 due to a cancer diagnosis, which prompted her to start receiving social security benefits five years earlier than planned and to begin using her 401(k) account. She mentioned that now she is concerned about other rising costs, especially Medicare expenses, which may exceed the annual increase in social security benefits.
The U.S. Social Security Administration stated that over the past decade, the average cost-of-living adjustment has been around 3.1%.
Estimates in September indicated that social security COLA could reach its highest level in three years.
Non-partisan elderly advocacy organizations The Senior Citizens League and independent social security policy analysts Mary Johnson both predict that the COLA in 2027 will be 3.5%. At the same time, AARP expects welfare benefits to increase by 3.6%.
The last time recipients saw such a significant increase was in 2023, when due to soaring inflation, COLA soared to 8.7%, the highest rate in forty years. In 2022, as inflation rates began to rise, recipients received an increase of 5.9%.
In 2026, the benefits for social security recipients were increased by 2.8%.
According to The Senior Citizens League, if the social security living cost is adjusted to 3.5% in 2027, the average monthly welfare check will increase by $67.90, from $1,940 to approximately $2,008.
COLA may differ from the estimate.
AARP A recent survey found that 70% of adults aged 50 and above believe that a 5% to 8% increase is sufficient to help them keep up with the costs of daily life.
Since the official announcement on social security COLA is expected to be released on Wednesday, which will include inflation data for an additional month, the results may differ from the estimates from September.
Johnson indicates that in the event of a "very sharp rise in inflation," social security COLA could rise to 3.6%. However, if inflation is lower than expected, COLA might only be 3.4%.
Adjustments to the cost of living for social security will be automatically reflected in benefits to help keep up with inflation.
Since 1975, the COLA of social security and supplementary income benefits ( SSI ) has been calculated on an annual basis. However, in certain years with little or no inflation at all, the COLA will be zero.
On Monday, Frank Bisignano, the director of the Social Security Bureau, spoke about the upcoming COLA during an interview with CNBC's program Squawk on the Street, saying, "People are very, very grateful for this adjustment and are also looking forward to it."
How does the cost of Medicare affect COLA?
In 2027, the cost increase of Medicare may limit the actual increase that social security recipients will see in their monthly checks.
The standard monthly premium for Medicare Part B is usually automatically deducted from the social security check and is expected to rise to $209.50 in 2027, which is higher than the $202.90 in 2026. Part B covers certain medical necessities and preventive services. If income exceeds certain thresholds, some recipients may also need to pay additional fees, namely the income-related monthly adjustment amount ( Income - Related Monthly Adjustment Amounts ).
Meanwhile, analysis from KFF, a non-partisan health policy research institution, indicates that the premiums for Medicare Part D prescription drug plans may also see a slight increase in 2027. Part D premiums may also be deducted directly from social security checks.
The Trump administration recently announced that it will make a one-time direct payment of $90 to over 20 million Medicare Part B participants to help cover their monthly premiums.
A retiree from New Hampshire, Dalrymple, said she does not believe she qualifies for this one-time payment, as the program excludes millions of Part B beneficiaries based on certain eligibility criteria. She expressed her concern that the cost in 2027 will continue to rise.
“If the costs associated with Medicare eat up all of my living expenses, I would truly be hit hard by the affordability crisis, as rent is rising, groceries are getting more expensive, and so is gasoline,” said Dalrymple.
Some Democrats, such as the senior member of the Senate Finance Committee and Democratic Senator from Oregon, Ron Wyden, questioned the motivation behind the Trump administration's distribution of these $90 payments about a month before the midterms. U.S. President Donald Trump also stated that if the Republicans retain control of both the House of Representatives and the Senate, the government will distribute $5,000 to each adult American citizen.
Bisignano stated on Monday to CNBC that these one-time payments of $90 are an example of the Trump administration's "caring for Americans," aimed at helping vulnerable groups, including the elderly, to escape poverty.
An 80-year-old resident of Montpelier, Vermont, identified as Kathy Callaghan, stated that she would prefer for this money to be invested in the Medicare trust fund rather than distributed to Americans via checks. It is anticipated that the funds allocated for the payment of Part A will be depleted by 2033.
Callaghan said that she plans to donate her $90 check to the senatorial campaign of James Talar, who is issuing tokens. James Talar is a Democratic state representative from Texas, running for a seat in the U.S. Senate.
