4 Types of People Who Will Benefit Most From Social Security's 2027 COLA

The announcement of the 2027 cost-of-living adjustment (COLA) means a boost in Social Security senior benefits next year. Designed to help ensure benefits retain their buying power and keep up with inflation, the COLA increases benefits for nearly 72 million Social Security beneficiaries and about 7.3 million people receiving Supplemental Security Income (SSI). However, certain people stand to benefit more from the increased benefits than others.

Here's what you should know about how the COLA works, who may benefit from it the most, and how it may affect your benefits.

How the COLA impacts benefits

On October 14, the Social Security Administration (SSA) announced a 3.6% COLA for 2027. The COLA is calculated using third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data. The COLA raises the average retired-worker benefit from $2,095 in 2026 to about $2,170 in 2027.

Benefits don't increase by a uniform, flat rate. Instead, they increase by the percentage determined by the COLA - in this case, 3.6%. Therefore, the size of a beneficiary's benefit checks in 2026 directly affects the size of their increase in 2027.

Certain groups of people may gain more than others from the COLA.

High lifetime earners and those who delayed claiming benefits

Individuals whose benefit checks are larger should see a larger increase in benefits from the COLA. For example, a $1,500 benefit should increase by about $54 per month, but a $2,000 benefit should increase by about $72.

Social Security benefits are calculated based on an individual's earnings, and the SSA uses up to 35 years of earnings, including the highest indexed earnings, in that formula. High lifetime earners who receive larger benefit checks stand to receive a larger benefits bump than lower-earning individuals who receive smaller checks.

Similarly, individuals who delayed claiming benefits may see a bigger boost because of their larger checks. Individuals who wait to claim Social Security until after their full retirement age receive delayed retirement credits that help their benefits grow. For each year they don't claim, their monthly benefit increases by about 8%. Once individuals reach age 70, their benefits stop growing. Delaying benefits for even a year or two may result in a larger check, and those individuals then receive a bigger boost from the COLA.

Beneficiaries not enrolled in Medicare

Medicare increases may quickly eat into any extra benefits that the COLA provides. For example, the Medicare Part B premium is projected to increase by $6.60 to $209.50 per month in 2027. Since Part B premiums are taken out of Social Security checks, they may start to erode the benefits before recipients see the money.

Other costs are increasing, too. Though the Centers for Medicare & Medicaid Services (CMS) projects that average premiums for Medicare Advantage plans may fall in 2027, an Investopedia analysis of CMS data found that premiums may rise in 19 states.

Social Security recipients who have other forms of health insurance may avoid these increases and keep more of their benefits.

SSI recipients

SSI recipients benefit slightly more simply because of timing. Social Security recipients should see the boost from the COLA beginning in January 2027, but SSI recipients should receive that boost just a bit earlier, on December 31, 2026. Some individuals who receive both Social Security and SSI may see both types of benefits increased by the COLA.

Survivors and spouses

Survivors and spouses also stand to receive more benefits because of the COLA. The COLA applies to survivor and spousal benefits the same way it applies to workers' Social Security benefits.

The people who gain the least from the COLA

Just as several groups of people stand to benefit more from the COLA, others may benefit less. Individuals whose Medicare Part B premium increases significantly may see that premium consume a large share of their check. That effect may be worsened for low-income individuals who already received smaller benefit checks and who, in turn, received a smaller COLA increase.

Households with a rising income that crosses an Income-Related Monthly Adjustment Amount (IRMAA) or benefit-taxation threshold may also see minimal benefit from the COLA. For example, up to 85% of an individual's Social Security income may be taxable. If that individual's income climbs, they may be required to pay extra tax on their benefits, reducing the amount they gain from the COLA.

The IRMAA, a surcharge that may be added to Medicare Part B and Part D premiums, may also impact higher-income Medicare recipients. If those recipients' income crosses certain thresholds, they may have to pay the IRMAA surcharge, which may eat into any COLA increase.

Bottom line

Though the COLA increases benefits for all beneficiaries, the effect isn't uniform, and some people may benefit more from the increase than others. To find out how your benefits may be affected, you may log into your my Social Security account beginning in late November to receive a COLA notice that includes your 2027 benefit amounts. If you haven't signed up for paperless notices in my Social Security, you'll receive your COLA notice by mail in December.

Once you know your 2027 Social Security amounts, you may want to revisit your budget and your retirement plan to make any adjustments needed.

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