It's Official: Here's Your Social Security Raise for 2027

If you've been paying attention to prices at the supermarket and pump, you may be aware that inflation has soared this year. And that's probably caused you a fair amount of financial strain.

But there's a small silver lining. Because of that uptick in inflation, Social Security benefits are getting their largest cost-of-living adjustment (COLA) in years.

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The Social Security Administration just announced a 3.6% COLA for 2027. That's considerably larger than the 2.8% COLA that arrived this past January.

But before you start counting your extra money, know that there's a piece of the puzzle that's still missing.

How much will your Social Security benefits increase in the new year?

The average retiree on Social Security today collects about $2,088 per month. When we apply a 3.6% COLA, the typical beneficiary could see an increase of $75 per month. But the COLA alone doesn't tell the whole story.

Seniors who are enrolled in Medicare and Social Security pay for Part B, which covers diagnostic services and outpatient care, out of their monthly benefits. We don't know how much Part B costs will increase in 2027.

This year, the cost of Part B rose by $17.90 per month. Even if the 2027 increase is far more modest, that added cost will eat into your COLA if you're on Medicare, resulting in a smaller net raise.

How to make the most of your 2027 COLA

If you've been struggling to keep up with your expenses, you may find that a 3.6% COLA helps you better cover your costs. But one thing you generally don't want to do is use your upcoming COLA as a reason to take on additional expenses.

We don't know what 2027 has in store for inflation. If costs continue to climb, inflation could outpace that 3.6% COLA, just as this year's 2.8% Social Security raise was rendered fairly ineffective once prices started ticking upward.

You may, in fact, want to make a point to save some of your 2027 Social Security COLA if you find that you're not spending your checks in their entirety right away. That could serve as a cushion in case you run into an unexpected expense later in the year or need the money to keep up with rising costs.

Finally, don't assume that a 3.6% Social Security COLA will improve your financial picture greatly. That raise might buy you some breathing room. But if you've been struggling to make ends meet, it may be time to take action, such as relocating to a less expensive part of the country or working part-time. Either move could do a lot more for you financially than a $75 monthly raise, or whatever increase you're eligible for based on your current benefit.

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