The Social Security Administration said Wednesday that its annual cost-of-living adjustment, or COLA, will raise benefits 3.6 percent in 2027, a larger increase than the 2.8 percent that took effect this year, according to Business Insider. The agency projected that the change will add about $75 a month on average for the roughly 73 million people who receive monthly benefits, ABC News reported. Payments for nearly 7.5 million people on Supplemental Security Income are also set to increase, the New York Post reported.
The reported average varies by outlet. NBC News reported that the agency put the average gain at about $70 a month, but elsewhere in its coverage cited a $75.15 estimate from the Senior Citizens League, an advocacy group. In a statement, Commissioner Frank Bisignano of the Social Security Administration described the adjustment as bringing recipients “greater financial stability.”
Advocates say the increase falls short
Critics argue the raise will not keep pace with household costs. Shannon Benton, executive director of the Senior Citizens League, said the increase “provides a little breathing room” but will not reverse years of rising expenses, NBC News reported. The league also found in a survey that 89 percent of older Americans considered this year’s 2.8 percent adjustment inadequate.
Polling by AARP in September showed about three in four Americans aged 50 and older expected a projected 3.5 percent raise to lag behind prices. AARP chief executive Myechia Minter-Jordan said a fifth of older Americans have no retirement savings, according to the New York Post. ABC News reported that inflation accelerated in August as gasoline prices climbed after the U.S. and Iran resumed hostilities.
Medicare costs and the payroll tax cap
Other changes are also affecting retirees. A temporary federal subsidy tied to Medicare Part D premiums is scheduled to expire at the end of the year, the New York Post and ABC News reported. The Centers for Medicare & Medicaid Services expects premiums to rise only modestly for many enrollees. ABC News also interviewed Lorrie Ufkin, a 71-year-old retiree in Minnesota, who said her premiums and drug costs are expected to rise.
The taxable earnings cap will rise as well. For 2027 that ceiling moves to $192,300, from $184,500 in 2026, ABC News reported. In June, Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Moreno, R-Ohio, proposed lifting the cap entirely, a change the Peterson Foundation projects would raise about $3 trillion over 10 years. Political obstacles remain, and the New York Post noted that some Republicans have historically opposed tax increases aimed at high earners.
Long-term funding concerns
The benefit increase arrives as the program faces a funding gap. Trustees’ projections released in June show the combined reserves for retirement and disability benefits running out in 2034, after which incoming payroll taxes would cover roughly 83 percent of scheduled benefits. Business Insider cited the end of 2032 for when the Old-Age and Survivors Insurance Fund would stop paying full benefits, a separate measure from the combined figure.
Lawmakers have not enacted a permanent fix, ABC News reported. Notices about the new amounts begin in November through the agency’s online portal, Business Insider reported. The reports did not say whether Congress will act on the payroll tax cap or other changes before reserves are depleted, and the midterm elections are weeks away, ABC News noted.
