The 2027 Social Security Raise: What It Will and Won't Cover

What the COLA is and why it exists

The COLA is an annual increase in Social Security benefits meant to help them keep up with rising prices. Without it, a benefit that covered your bills in 2015 would buy a lot less today.

It applies to retirement benefits, spousal benefits, survivor benefits, and disability benefits. It also affects Supplemental Security Income.

It's automatic. You don't apply for it. It just shows up in your January payment.

How the COLA is calculated

This part is more mechanical than most people realize.

The government looks at a specific inflation measure called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. It takes the average of that index for July, August, and September of this year and compares it to the average for the same three months last year. The percentage increase becomes the COLA.

That's why the announcement comes in October. The September inflation report is the last piece of the math, and it comes out on October 14 this year.

In plain terms: the COLA is a look backward at how much prices rose over the past year, measured over three specific summer months.

Why the number feels too low for a lot of retirees

What a lot of people don't know is that the CPI-W is built around the spending of working households, not retirees.

Retirees tend to spend more of their money on housing and health care, and less on things like commuting to work or buying new electronics. There's a separate index called the CPI-E, for the elderly, that weights spending more like a typical retiree's budget. But the COLA isn't based on it.

So if your costs are heavy on health care, insurance, and housing, your personal inflation rate might be higher than the COLA. That's part of why so many retirees feel like they're falling behind even when the raise looks reasonable.

The Senior Citizens League surveys retirees every year, and its 2026 survey found that 89% of older Americans thought the 2026 COLA was too low. It also found that 44% of seniors draw all of their income from Social Security.

A quick look at recent raises

The last few years give some perspective:

That 8.7% in 2023 was the post-pandemic inflation spike. Since then, raises came back down. This year, higher energy prices pushed inflation back up, which is why the 2027 raise is expected to be larger.

From 2010 to 2019, the COLA averaged about 1.4% a year. From 2020 to 2025, it averaged about 3.9%. So if it feels like prices have been rising faster this decade, the numbers back that up.

What the raise looks like in dollars

Let's put it in real terms.

[UPDATE OCT 14] If your check is $2,000 a month, a 3.5% COLA raises it to $2,070. That's $70 more a month, or $840 more for the year.

The average Social Security check is a little under $2,000 right now. At 3.5%, the average benefit would go up by roughly $68 a month.

That's before anything gets taken out. And for most retirees, something does.

What takes a bite out of the raise: Medicare

For most people on Social Security who also have Medicare, the Part B premium comes straight out of the Social Security check. So when Part B goes up, part of your COLA goes right back out the door.

The standard Part B premium is $202.90 a month in 2026. The Medicare Trustees Report projects it at about $209.50 for 2027, an increase of about $6.60. That's a projection. The official number usually comes out later in the fall.

So let's go back to our example. If your check goes up $70 and your Part B premium goes up about $7, you've kept about $63 of the raise. That's still a real increase. But it's not the full headline number.

And if you also pay Part D or a Medicare Advantage premium out of your check, or you pay higher premiums because of your income, the math changes again.

A protection called "hold harmless"

There's a rule that protects many people from having their Social Security check actually go down because of a Part B increase. In general, if the Part B increase would be bigger than your COLA increase, your Part B premium is limited so your net check doesn't drop.

That protection doesn't apply to everyone. People who pay higher premiums because of their income, people who are new to Medicare, and people who don't have Part B taken from their Social Security check generally aren't covered by it. With a COLA around 3.5% and a modest Part B increase, most people won't need it this year. But it's worth knowing it exists.

Higher income, higher Medicare premiums

If your income is above certain levels, you pay more for Part B and Part D. That's called IRMAA. Medicare generally looks at your tax return from two years earlier, so 2027 premiums are generally based on 2025 income.

That catches people off guard when they had a one-time spike in income, like a big retirement account withdrawal or the sale of an asset. If that's you, it's worth checking before the bill shows up. And if your income went down because of retirement or another life change, there's a process to ask for a redetermination based on more recent income.

What takes a bite out of the raise: taxes

A lot of people don't realize Social Security benefits can be taxable.

Whether yours are depends on what's called your combined income, which is basically your other income plus half of your Social Security benefits. Above certain thresholds, up to 50% of your benefits can be taxable. Above higher thresholds, up to 85% can be.

Here's the catch. Those income thresholds were set decades ago and aren't adjusted for inflation. So as COLAs raise benefits over time, and as pensions and other income rise, more retirees get pulled into paying tax on their benefits.

For FRS retirees, this matters. Your FRS pension counts as income in that calculation. So does money you withdraw from a traditional IRA, a 457 plan, or the FRS Investment Plan. A retiree with a solid pension may find a meaningful portion of their Social Security is taxable.

The new deduction for people 65 and older

There's some relief for older taxpayers right now. The 2025 tax law created a temporary additional deduction for people 65 and older, on top of the regular standard deduction. It's scheduled to run through 2028, and it phases out at higher incomes.

That deduction doesn't make Social Security itself tax-free. But for many retirees, it lowers taxable income enough to reduce the tax they owe overall.

Taxes on benefits get complicated fast. How much of your benefit is taxable, and whether the new deduction helps you, depends on your whole return. A tax professional can run your actual numbers.

The trust fund headlines, explained calmly

Every year, there's a wave of headlines saying Social Security is "running out of money." A lot of retirees and near-retirees are genuinely worried about it. One recent survey found 74% of pre-retirees fear Social Security cuts.

So let's be precise about what's actually being said.

In June 2026, the Social Security Trustees released their annual report. It projects that the main retirement trust fund will be depleted in the fourth quarter of 2032. At that point, if Congress does nothing, incoming payroll taxes would still be enough to pay about 78% of scheduled benefits. That's an automatic cut of about 22%.

The Congressional Budget Office reached the same 2032 date in its own projection earlier this year, but estimated a steeper cut, about 28%.

Now, here's what those numbers mean and don't mean.

What it does mean

It means Social Security has a real funding gap, and it's getting closer. The program's costs are now higher than its income, and it's been drawing down its reserves. If nothing changes, there would be a cut, and it would be meaningful. On a $2,000 check, a 22% cut would be about $440 a month.

What it doesn't mean

It doesn't mean Social Security disappears. Even in the worst case the Trustees project, the program keeps paying most of what's owed, because workers keep paying payroll taxes.

It also doesn't mean a cut is locked in. Congress has stepped in before. The last major fix was in 1983. The options on the table are the same ones that always come up: raising the payroll tax, raising or removing the cap on wages subject to the tax, adjusting benefits for future retirees, or some combination.

I'm not going to predict what Congress does. But I will say this. Planning around a Social Security benefit that's completely gone isn't realistic. Planning as if nothing will ever change isn't either. A lot of people stress-test their retirement plans against a partial reduction, just to see whether the plan still holds up. That's a reasonable way to think about it without panicking.

What this means if you're still working

If you haven't started Social Security yet, the COLA still matters to you, even though you're not getting checks.

Once you turn 62, your benefit starts getting COLA increases whether you've claimed yet or not. So if you're waiting to claim, your eventual benefit is still growing with each year's adjustment.

The bigger decision for people still working is when to claim. Claiming early permanently reduces your monthly benefit. Waiting past your full retirement age, up to 70, permanently increases it. That decision interacts with your pension, your health, your spouse's benefits, and the rest of your income. It's one of the biggest retirement decisions most people make, and it's worth making on purpose.

A quick note for anyone who spent part of a career in a job that didn't pay into Social Security. The Social Security Fairness Act, signed in January 2025, repealed two rules, the Windfall Elimination Provision and the Government Pension Offset, that used to reduce benefits for some people with pensions from that kind of work. If those rules affected you or a spouse in the past, it's worth confirming your benefit reflects the change.

If you're married: spousal and survivor benefits

The COLA applies to spousal and survivor benefits too, not just the worker's own benefit. So if you receive a benefit based on your spouse's work record, your check goes up by the same percentage.

Survivor benefits deserve a little extra attention, because they're one of the most important and least understood parts of Social Security. In general, when one spouse dies, the surviving spouse can receive the higher of the two benefits, not both. The smaller check stops.

That has two practical effects.

First, household income drops when a spouse dies, sometimes by a lot. If a couple was receiving $2,000 and $1,400, the survivor would generally keep the $2,000 check and lose the $1,400 one. That's worth planning for ahead of time, especially if the household also relies on a pension with a survivor option.

Second, the claiming decision of the higher earner affects the surviving spouse for the rest of their life. When the higher earner waits longer to claim, the larger benefit that could pass to the survivor grows too. That's one of the reasons claiming decisions are best made as a couple, not individually.

For FRS members, this connects to the pension survivor option you choose. Social Security survivor benefits and your pension's survivor choice work together to determine what your spouse would live on. It's worth looking at both side by side, not in isolation.

How to plan around the COLA

A few practical things to do once the number is announced.

Update your budget with the real number

Take your current check, apply the official COLA, and then subtract any change in your Medicare premium. That's your real 2027 check. Use that number, not the headline percentage.

Compare your raise to your actual costs

Look at where your money actually went this year. If your biggest increases were in insurance, health care, or groceries, your personal inflation may be higher than the COLA. It's better to see that gap now than to feel it slowly over the year.

Check your tax withholding

If a larger benefit or other income changes means more of your Social Security becomes taxable, you may want to adjust your withholding or estimated payments so April doesn't bring a surprise. You can request withholding from Social Security directly.

Watch for the notice

Social Security sends notices about your new benefit amount, typically in December. Many people can see theirs online earlier through their my Social Security account. It's worth checking that the numbers match what you expect.

What I'm not going to do

I'm not going to tell you the COLA is enough, or that it isn't. For some retirees it'll cover the increase in their costs. For others, especially those with high health care or housing costs, it won't.

I'm also not going to tell you what Congress will do about the trust fund. Anyone who says they know is guessing.

What I will say is this. When it comes down to it, the COLA is one line in your retirement budget, not the whole thing. The people who feel most secure in retirement usually aren't the ones counting on the raise to fix things. They're the ones who planned for the raise to fall a little short and built some room around it.

The short version

• The 2027 COLA is announced October 14 and takes effect with January checks. [UPDATE OCT 14] Estimates were around 3.5%.
• It's calculated from the CPI-W for July through September, which isn't built around retiree spending.
• Medicare Part B comes out of most checks, and it's projected to rise about $6.60 a month in 2027.
• Up to 85% of Social Security benefits can be taxable, and the income thresholds aren't indexed for inflation.
• A temporary extra deduction for people 65 and older runs through 2028.
• The Trustees project the retirement trust fund depleted in late 2032, with about 78% of benefits still payable if Congress doesn't act.
• Plan with your real net check, not the headline percentage.

If you want to see how your Social Security, your pension, and your Medicare costs fit together for next year, I'm always happy to walk through it.

Frequently asked questions

When is the 2027 Social Security COLA announced?

The Social Security Administration announces the 2027 COLA on October 14, 2026, after the September inflation report is released. The increase takes effect with benefits paid in January 2027.

How much will Social Security go up in 2027?

[UPDATE OCT 14] Forecasts ahead of the announcement ranged from about 3.4% to 3.6%, with The Senior Citizens League estimating 3.5%. The official figure is set by the September inflation data.

How is the Social Security COLA calculated?

It's based on the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September, compared with the same three months of the prior year.

Does the Medicare premium reduce my COLA?

For most people, yes. The Part B premium is usually deducted from Social Security checks, so an increase in Part B reduces the net raise. The 2027 Part B premium is projected at about $209.50, up from $202.90, but the official figure is announced later in the fall.

Is Social Security running out of money?

The 2026 Trustees Report projects the main retirement trust fund will be depleted in late 2032. If Congress doesn't act, ongoing payroll taxes would still pay about 78% of scheduled benefits. Congress can change the outcome before then.

Are Social Security benefits taxable?

They can be. Depending on your combined income, up to 50% or up to 85% of your benefits may be subject to federal income tax.

Educational content only. Not individualized investment, tax, or legal advice. Examples are hypothetical and for illustration only. Benowitz Wealth Management is a brand of Joy Financial Group LLC, a Florida state-registered investment adviser. Consult a qualified tax professional regarding your specific situation.

Neither Joy Financial Group LLC nor Benowitz Wealth Management is affiliated with, endorsed by, or employed by the Florida Retirement System, the Florida Division of Retirement, the State Board of Administration of Florida, MyFRS, or any government agency. FRS members may obtain free, unbiased guidance from the MyFRS Financial Guidance Line at 1-866-446-9377.