Here's how much extra money could be in your monthly Social Security check next year

By Jessica Hall

Social Security's cost-of-living adjustment will boost retirees' monthly budgets. But will it be enough?

The Social Security COLA is designed to help about 68 million Social Security beneficiaries keep pace with inflation.

An expected bump in Social Security payments could add an average of $71 a month to retirees' benefits - a welcome, if modest, boost at a time when costs are rising for things like gas, groceries, healthcare and housing.

Social Security's cost-of-living adjustment for 2027 is expected to be 3.4% to 3.6%, which is higher than the average increase of 2.6% seen over the last 20 years. The forecasts are also above the 2026 COLA of 2.8%. The projected jump would be the largest increase since 2023. The official announcement of the 2027 COLA will be released on Oct. 14, and the higher payments will begin in January.

The average Social Security retirement benefit was about $2,087 a month as of August, according to the Social Security Administration.

Bonnie Nawara, 73, said she would welcome any increase in Social Security. She hasn't been able to add to her savings or put money away for travel, and she has cut back on extras like dining out with friends.

"I'm feeling the crunch," said Nawara, a retired nonprofit director who lives in Michigan and who also helps support her brother.

"Food, fuel, everything has gone up. Grocery prices are hard to ignore - a pound of hamburger these days? A chuck roast to put in the Crock-Pot costs $25 or $30. I used to be able to save, but now I'm lucky if I can save anything anymore," she said.

The COLA is not a raise, but rather an adjustment to help about 68 million Social Security beneficiaries keep pace with inflation.

"While that increase is certainly welcome, it can be quickly absorbed by rising costs for necessities such as healthcare, food, housing, utilities, and insurance. For seniors who rely primarily on Social Security, maintaining purchasing power is more important than simply seeing a larger dollar amount in their monthly benefit," the Senior Citizens League, an advocacy group, said in a statement to MarketWatch.

Social Security is crucial to the finances of older adults, with 44% of older Americans depending on the program for all of their income, up from 39% in 2025, according to the Senior Citizens League.

"That makes them extremely vulnerable," said Mary Johnson, an independent Social Security and Medicare analyst.

Retirees often feel like it's a challenge to keep up with rising costs for everyday expenses, making some big-ticket items or unexpected expenses even harder for seniors to pay for when they don't have retirement income outside of Social Security to fall back on, Johnson said.

"It's great that we're getting a cost-of-living adjustment, but the challenge is trying to keep up with the cost of gasoline [and] rent increasing, eggs and juice and milk," said Mike Lynch, managing director of applied insights at the Hartford Funds. "We need to think long-term instead of every single year relying on a COLA. What else can we do to outpace inflation? I don't just want to keep up with inflation."

COLA may not reflect retirees' real costs

Automatic annual adjustments to Social Security started in 1975 as a way to protect beneficiaries from losing their buying power to inflation.

The COLA is tied to the CPI-W, an index based on the prices paid by urban workers. Legislators have proposed instead using a different index, the CPI-E, which focuses on costs faced by the elderly including healthcare, housing, utilities, groceries and insurance.

"Even a 3.5% cost-of-living adjustment may not feel like a significant improvement for many seniors. The reason is that the COLA formula does not fully reflect how Social Security beneficiaries actually spend their money," the Senior Citizens League said.

"Anything we can tie into the rising cost of healthcare and long-term care would help," Lynch said. "As more and more people are living longer in the U.S., those prices are going to continue rising."

Some of the COLA will be wiped out by an increase in the Medicare Part B premium, which is directly deducted from Social Security checks. The Medicare Part B monthly premium is projected to be $209.50 in 2027, according to the Medicare Trustees Report. In 2026, the premium was $202.90 per month.

The Trump administration recently sent $90 checks to 20.8 million middle-class older adults, characterizing the payment as a way to help offset the Medicare premium increase. People who have Medicare Advantage, the private health insurance alternative to traditional Medicare, were not eligible for the checks, which were timed to arrive ahead of the midterm elections. Seniors who receive premium assistance from Medicaid or higher-income older adults who pay an income-related monthly adjustment amount (IRMAA) were also not eligible.

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"We don't expect a one-time payment to make a significant or lasting difference in an older adult's overall budget. It may provide some short-term relief, particularly for beneficiaries facing higher Medicare costs, but it does not address the continuing increase in the cost of essential goods and services," the Senior Citizens League said. "Seniors need income that keeps pace with their expenses month after month and year after year. A one-time payment may help cover an immediate expense, but it does not solve the underlying problem of whether Social Security benefits are adequately maintaining their purchasing power."

Social Security's looming problem

A high COLA, while welcome, also raises other concerns, as it speeds the insolvency of the Social Security trust fund.

Social Security's funding crisis means that in 2032, benefits are projected be cut by 26%, according to the Congressional Budget Office, the nonpartisan federal agency that provides Congress with independent analysis of budgetary and economic issues. The Social Security trustees, meanwhile, projected in June that benefits would be cut by 22%. The cuts will be automatic unless Congress acts to strengthen the system.

"We can either stick our head in the sand and hope that there are no pullbacks," Lynch said. "Or we can see if there's anything we can save in the next four to five years to reduce our expenses, be a little more modest in spending. That could magnify quite a bit."

He said he hopes Congress will step in to shore up Social Security but added that Americans would be smart to brace for cuts just in case.

"If we're wrong and there is a pullback, then you're in better shape because you saved. If we're right and there's no pullback, then you're still in better shape because you saved a little more," he said.

Alessandra Malito contributed to this report.

-Jessica Hall

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10-12-26 1147ET