The cost-of-living adjustment for 2027 will be 3.6%, which will give Social Security recipients an average of $75 more per month
Costs in some categories have outpaced the cost-of-living adjustment for Social Security in 2026.
Social Security's cost-of-living adjustment is intended to help seniors pay for their everyday expenses, such as housing, transportation and healthcare.
The Social Security Administration announced on Wednesday that the cost-of-living adjustment for 2027 will be 3.6%, up from 2.8% this year. That will amount to an additional $75 a month for the average Social Security recipient. In August, the average monthly retirement benefit was $2,087, according to the Social Security Administration.
The cost-of-living adjustment, or COLA, is calculated based on the consumer-price index for urban workers, or CPI-W, but some experts say the consumer-price index for people 62 and older, known as CPI-E, better reflects the costs faced by Social Security recipients. MarketWatch used Bureau of Labor Statistics data for the CPI-E to measure the 2026 COLA of 2.8% against actual cost increases in spending categories between January and September of this year (the annual COLA takes effect in January).
According to the BLS data, costs in some categories, such as apparel and transportation, grew at a higher rate than the 2026 COLA, while in other major areas, including housing and medical care, cost increases were lower than 2.8%. But overall, the 2026 COLA is lower than the rate at which all prices tracked by the CPI-E have grown.
Transportation, which includes new and used cars, gasoline and public transportation, showed the fastest growth. The education and communication category includes wireless and residential phone services. The "other" category includes tobacco, personal-care products and services, as well as legal services.
The 2027 COLA of 3.6% will be the highest since the 2023 and 2022 adjustments, which were 8.7% and 5.9%, respectively, according to the Social Security Administration.
-Alessandra Malito
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