The 2027 Social Security cost-of-living adjustment is expected to be between 3.5% and 3.6%, marking the biggest increase in benefits since 2023, according to current estimates.
The official figure is due to be released next month, after September’s inflation data is published on 14 October. The annual adjustment is calculated using a measure known as the Consumer Price Index for Urban Wage Earners and Clerical Workers.
The Senior Citizens League has estimated a 3.5% increase, while AARP has projected a 3.6% rise. Either figure would be higher than the 2.8% adjustment applied in 2026, but below the 8.7% increase seen in 2023.
That earlier rise followed a surge in inflation after the Covid-19 pandemic, supply shocks and Russia’s 2022 invasion of Ukraine pushed up energy prices.
This year, higher fuel costs have again contributed to inflation. Fighting in the Middle East, described in the source material as President Donald Trump’s war on Iran, together with Ukrainian attacks on Russian refineries, has driven prices higher.
US diesel prices have risen above $6.50 a gallon, increasing costs across goods that are shipped, harvested or manufactured using the fuel. Technology supply pressures linked to the artificial intelligence boom have also pushed up the cost of chips and other key components, with consumer electronics makers including Apple raising prices.
Additional tariffs have added to the pressure. After the Supreme Court struck down duties imposed under the International Emergency Economic Powers Act, Mr Trump used other laws to introduce new tariffs and raised levies on Canada in July. Congress also gave him authority earlier this month to impose tariffs of up to 100% on major consumers of Russian energy.
Food, insurance and utility bills have also become more expensive, increasing the amount Social Security must pay to help recipients keep pace with living costs.
States where retirees receive the biggest Social Security payments
Every recipient receives the same percentage increase, regardless of where they live. However, people who earned more during their working lives receive larger monthly payments, meaning their cash increase will also be greater.
The average monthly benefit for a retired worker across the US is $2,071, according to the Social Security Administration. Retirees in some states receive more than that figure.
New Jersey has the highest median monthly payment, at $2,256, according to a tally of Social Security data by Motley Fool. A 3.5% to 3.6% adjustment would add roughly $79 to $81 a month for recipients in the state.
For comparison, the same projected rise would increase the national average payment by about $72.49 to $74.56 a month.
New Jersey is followed by Connecticut, where the median payment is $2,249, and Delaware at $2,225. Other states above the national average include 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.
The increase will come as older Americans continue to play a significant role in US consumer spending. Wall Street veteran Ed Yardeni has described the economy as “G-shaped”, arguing that divisions between generations are more important than the traditional idea of a split between income groups.
Baby boomers hold nearly $90 trillion in net wealth, about 52% of all US household wealth, while the Silent Generation holds a further $20 trillion. Much of that wealth is expected to pass to their boomer children.
“The concentration of wealth among older generations suggests that consumer spending is increasingly being supported by the spending of accumulated retirement wealth rather than labor income,” Mr Yardeni said in a note last month.
Baby boomers control about 54% of household stocks and mutual funds, worth close to $30 trillion, and own 41% of household real estate. Mr Yardeni said their wealth helps explain why spending has remained strong despite high interest rates and inflation, while higher rates have also increased returns from fixed-income investments such as Treasury bonds.
