5 minEconomy
Social Security COLA for 2027 Projected at 3.5% to 3.6%, Biggest Since 2023
The annual cost-of-living adjustment for Social Security is expected to be the largest since 2023, with advocacy groups projecting a 3.5% to 3.6% increase for 2027. Retirees in states with higher average benefits, such as New Jersey and Connecticut, will see the biggest dollar gains.
Social Security beneficiaries are on track to receive their largest cost-of-living adjustment in four years, with advocacy groups projecting a 3.5% to 3.6% increase for 2027. The official figure will be announced next month, but estimates from the Senior Citizens League and AARP already point to a significant bump from the 2.8% adjustment that took effect in 2026.
The projected increase would be the biggest since 2023, when benefits rose 8.7% amid post-pandemic inflation and energy price shocks linked to Russia's invasion of Ukraine. This time, a different conflict is driving costs higher: President Donald Trump's military campaign against Iran. Combined with Ukraine's attacks on Russian refineries, the fighting has pushed fuel prices up sharply. Diesel in the United States has topped $6.50 a gallon, raising costs for anything that is shipped, harvested, or manufactured.
At the same time, the artificial intelligence boom has created a supply crunch for semiconductors and other technology inputs. Consumer electronics makers, including Apple, have raised prices as costs climb. Trump has also continued his trade war, invoking new tariffs under laws other than the International Emergency Economic Powers Act, which the Supreme Court struck down. In July, he hiked levies on Canada, and earlier this month Congress gave him new authority to impose 100% tariffs on the top consumers of Russian energy. Add in more expensive beef, insurance, and utilities, and the pressure on household budgets keeps building.
The cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, a subset of the broader CPI. The September reading, due on Oct. 14, will finalize the 2027 figure. While all recipients receive the same percentage increase regardless of where they live, those who earned more during their working years receive bigger monthly checks, so their annual adjustments are larger in dollar terms.
Nationwide, the average monthly benefit for a retired worker is $2,071, according to the Social Security Administration. But typical checks in several states run above that average. New Jersey retirees have the highest median Social Security check at $2,256 a month, according to a Motley Fool tally of Social Security data. Based on the COLA estimates for 2027, they should see about $79 to $81 more per month, compared with $72.49 to $74.56 for the nationwide average. Connecticut follows at $2,249, then Delaware at $2,225, New Hampshire at $2,215, Maryland at $2,181, Washington at $2,144, Michigan at $2,139, Minnesota at $2,135, Massachusetts at $2,121, and Utah at $2,090.
Wealthier retirees have become a major force in the U.S. economy, which has remained resilient despite repeated shocks. Wall Street veteran Ed Yardeni has described the current landscape as a G-shaped economy, arguing that the idea of a K-shaped economy divided by class obscures a trend divided by generations. Helped by an extraordinary era of financial and economic gains, baby boomers now hold a net worth of nearly $90 trillion, or about 52% of all U.S. household wealth. The Silent Generation holds another $20 trillion and is expected to pass much of it on to their boomer children.
Boomers control about 54% of household stocks and mutual funds, worth close to $30 trillion, and own 41% of all household real estate, more than any other generation. That is why they can keep spending briskly despite high interest rates and inflation, Yardeni said. Higher rates also work in their favor, as fixed-income investments like Treasury bonds now yield more. «This dynamic helps explain why higher interest rates have done less to restrain consumer spending than many economists anticipated,» Yardeni wrote in a note last month. «For a large segment of the population, rates are not simply a cost of borrowing. They are also a source of income and the reason that home prices are rising.»
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