Nearly 72 million Americans will receive a 3.6% cost-of-living adjustment starting in January 2027, tying for the fifth-largest raise in 35 years as stubborn inflation continues to impact retirees, AOL reported.
The adjustment will boost the average retired worker’s monthly payout by $75, while disabled workers will receive an extra $59 per month, according to the Social Security Administration.
“vast majority of Americans, their Social Security is kind of the only thing in their retirement portfolio that is inflation-adjusted, and so it becomes really important for retirees, especially as they get older,” Bill Sweeney, AARP's senior vice president of government affairs, told Fox Business
“This cost-of-living adjustment – it may not matter as much when you’re 67 or 68 – but as you get into your 70s and 80s when it’s no longer realistic for you to go back to work if you need to sort of fill in your budget, the COLA really does make sure that Social Security keeps up with rising costs,” Sweeney said to Fox Business.
Inflation rates drive recent Social Security adjustments
The outsize 3.6% increase follows smaller adjustments in recent years as inflation eased, including 3.2% in 2024, 2.5% in 2025, and 2.8% in 2026, Fox Business reported. Previous historical spikes include an 8.7% bump in 2023.
“Social Security's cost-of-living adjustment is really critical to making sure that in years of high inflation, you don't fall behind,” Sweeney said.
Elevated inflation over the past two years has been driven partly by President Donald Trump’s trade and energy policies, AOL reported. Duties on imported goods like steel have increased manufacturing costs, while energy disruptions, including the closure of the Strait of Hormuz, pushed diesel prices to record highs in September.
According to a report by New York Federal Reserve economists published in Liberty Street Economics, tariffs implemented in 2025 increased goods price inflation by 2.9 percentage points by February 2026.
State-by-State Impact and Medicare Relief
Monthly payment increases will vary across the country depending on state-level benefit distributions and local cost-of-living expenses. According to the Social Security Administration’s most recent state-level benefit data analyzed by The Independent, retirees in California will see the largest average monthly increase at $375.15.
Delaware ranks second with an average monthly increase of $335.39, followed by Washington at $334.64, Maryland at $332.54, and Pennsylvania at $327.71. Conversely, Montana recipients will see the smallest average increase at $297.69, followed by North Dakota at $299.22 and New Hampshire at $301.39.
Meanwhile, roughly 29 million retirees enrolled in original Medicare may retain more of their annual raise than in previous years. The 2026 Medicare Trustees Report estimates that Part B premiums will rise by $6.60 per month, or 3.25%, the first time since 2023 that the Social Security COLA percentage exceeds the Medicare Part B premium increase.
How the annual COLA is calculated and applied
How is the annual COLA calculated?
The Social Security Administration computes the annual adjustment to account for inflation that occurred during the third quarter of the preceding year, using data from July, August, and September.
Will everyone receive the full 3.6% raise in their bank accounts?
Not necessarily, as gross benefits can be reduced by changes to Medicare Part B and D premiums, income-related surcharges like IRMAA, or voluntary federal tax withholdings, according to FinanceBuzz.
What was the largest Social Security COLA in recent history?
The largest cost-of-living adjustment in recent decades was 8.7% in 2023, which accounted for a sharp spike in inflation.
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