Social Security COLA for 2027 Will Be 3.6%

Retirees and other beneficiaries will receive the largest annual cost-of-living adjustment since 2023 in their Social Security checks next year, driven mainly by persistently high inflation.The Social Security Administration announced a 3.6 percent annual cost-of-living adjustment, or COLA, on Wednesday after the release of government inflation data for September.The COLA is determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

The index values for July, August and September are averaged to produce the official adjustment figure.For the average Social Security beneficiary, the COLA will translate to a $75 monthly increase, the government said.However, the actual amount for any retiree enrolled in Medicare will vary.

The Part B premium, which covers outpatient care, is usually deducted from Social Security benefits, changing net COLAs.Separately, Social Security said the maximum amount of earnings subject to the Social Security payroll tax would rise to $192,300, up from $184,500 this year.The Medicare board of trustees has projected that the monthly Part B premium will rise $6.60 in 2027 to $209.50.

The final figure will be released this fall, but if the projection holds, most beneficiaries will receive net COLAs of at least 3 percent.Other Medicare costs are rising, too.

Monthly premiums for some prescription drug plans, which are known as Part D, will jump $50 or more next year — although plenty of lower-cost options are available for people who shop the market during the annual enrollment period that begins Thursday.In addition, costs will rise and supplemental benefits will be reduced in private Medicare Advantage plans next year.The CPI-W reflects price changes for goods and services that working people buy and use, and it is under-weighted for health care costs, which have an outsize impact on older Americans.

The health spending burden for people enrolled in Medicare is more than twice as large as that of othe...