Will your Social Security benefits increase? What to expect next year

Business admin September 11, 2026 0 Comments

Will your Social Security benefits increase? What to expect next year

By 2027, Social Security beneficiaries can expect the largest cost-of-living adjustment in four years, driven by inflation and rising fuel and energy prices.

Although the Social Security Administration will not officially announce the COLA increase until Oct. 14, two of the leading organizations that advocate for older Americans — AARP and The Senior Citizens League — anticipate the increase could be between 3.5% and 3.6% for next year.

The increase would be the highest since 2023, when the COLA reached 8.7%, the largest rise in 40 years in response to the high post–COVID-19 pandemic inflation. The average COLA over the past decade has been 3.1%, with a COLA of 2.8% last year, slightly higher than the 2.5% for 2025.

The COLA announcement is always highly anticipated by the 75 million retirees, people with disabilities and Supplemental Security Income beneficiaries because it gives them an estimate of the monthly income they will receive when the new year begins.

In July, the average retirement benefit was $2,086, and a 3.5% increase could mean about $70 more per month.

How COLA is calculated

COLA is calculated using the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August and September. That average is compared with the same period from the previous year to determine the adjustment meant to help Social Security beneficiaries offset rising inflation.

So far, only the July CPI-W figure is available, which was 3.4%, according to the Bureau of Labor Statistics. The largest increase occurred in energy costs (14.7%), in addition to other outlays that directly affect household budgets, such as food and housing, which rose 3% and 3.2%, respectively.

The Federal Reserve Bank of Cleveland estimates that the CPI moderated to 3.38% in August and could fall to 3.3% in September, according to Yahoo Finance.

COLA is no longer enough

Fuel and energy prices, which in turn affect production and transportation costs for other goods, are key to determining how COLA impacts the purchasing power of Social Security beneficiaries.

In August, these prices were 26% higher than in the same month of 2025, The Senior Citizens League noted.

“Older people do not experience inflation as a percentage on a chart,” said Shannon Benton, executive director of TSCL. “They experience it in the grocery store, the pharmacy, their insurance premiums, and when paying rent. That’s why the size of the cost-of-living adjustment matters, but so does how accurately it reflects their actual expenses.”

A Senior Citizens League study indicated that 73% of older Americans rely on Social Security for more than half of their income, and about 29% depend entirely on these benefits to get by.

The Census Bureau estimates that roughly 10% of Americans of retirement age live in poverty, Benton said last year, although she noted her organization calculates that poverty rates among retirees could be higher than those shown in Census data.

At the same time, annual increases in Medicare premiums and deductibles can substantially reduce the relief from inflation that COLA is supposed to provide.

The cost of Medicare Part B, which covers doctor visits and outpatient services, is automatically deducted from retirees’ benefits. The exact increase for 2027 will not be known until November, but estimates in the government’s official publication, Medicare & You 2027, indicate that Part B premiums would rise to $209.50.

Supplemental help for 2027

The Supplemental Security Income program provides monthly payments to people 65 and older with limited resources and to individuals of all ages with disabilities. The maximum monthly amount in 2026 is $994 for an individual and $1,491 for a couple.

SSI beneficiaries receive the first payment with the projected increase for the next year in December because Jan. 1 is a holiday. This is done to comply with the SSI payment schedule, which sets disbursements for the first day of each month and moves them earlier when that date falls on a holiday.

That means SSI recipients receive two payments in December, although the second corresponds to January.

This group could be the most affected by inflation and other economic indicators. Core personal consumption expenditures, which exclude the volatile costs of food and energy, have continued to rise.

Personal consumption had increased 3.7% in July year over year, according to the Bureau of Economic Analysis at the Department of Commerce.

The price instability beneficiaries have faced this year also does not bode well for 2027, when inflation is expected to remain around 3%.