The Social Security Administration announced Wednesday a 3.6% cost-of-living adjustment for 2027, the largest COLA since 2023, when beneficiaries received 8.7%.

Roughly 72 million senior citizens, people with disabilities and others will see the increase in their monthly payments starting in January, while the roughly 7.3 million lower-income people receiving Supplemental Security Income also get the bump.

Monthly payments for retired workers will rise by about $75 to an estimated average of $2,170. The adjustment follows a 2.8% COLA for 2026, after 3.2% in 2024 and 2.5% in 2025.

The larger COLA was driven in part by energy prices that surged following the outbreak of the Iran war and have stayed elevated due to disruptions in the oil and gasoline supply chain, Fox Business reports.

A related metric, the Consumer Price Index, rose 3.7% in September compared with a year ago, the Bureau of Labor Statistics announced the same day the SSA made its announcement.

The adjustment is determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data for the third quarter of the year — July, August and September — calculated by the Bureau of Labor Statistics.

It aims to ensure the purchasing power of Social Security benefits is not eroded by inflation. 'Social Security will implement this cost-of-living adjustment for 76 million Americans, giving them greater financial stability,' said Commissioner Frank Bisignano.

Notifications of new benefit amounts will be available through the Social Security online portal in late November, and people not signed up for online alerts will receive a paper letter in December.

Many retirees will not keep the full 3.6% increase. Medicare Part B premiums are expected to rise to $209.50 a month in 2027, up $6.60 from this year, according to Medicare's most recent trustees report — though that is much smaller than the nearly $18 jump in premiums for 2026.

The Clarion-Ledger reports that Medicare plan comparison executive Mike Boshardy notes the headline number is not the real number: 'the average retiree next year that's roughly $70 to $75 in, $6.60 out, call it $64 to $68 of actual raise.'

The first SSI checks including the increase will be paid December 31, 2026.

Advocacy groups argue the formula understates what retirees actually pay. Social Security Works president Nancy Altman says the inflation measure is designed to reflect costs for working Americans, not retirees, who spend a larger share of income on healthcare and housing.

The Senior Citizens League's analysis, cited by CNN, found benefits have lost 13.7% of buying power over the past decade — a dollar of 2016 benefits is worth only 86 cents today — and payments would need to jump nearly $296 a month to restore it.

AARP CEO Myechia Minter-Jordan called the annual raise 'critically important,' noting one in five older Americans have no retirement savings.

The larger raise also intensifies the fight over the program's finances. Business Insider adds the trustees project the Old-Age and Survivors Insurance Fund cannot pay full benefits after the end of 2032.

Expect renewed pressure on lawmakers to reform the COLA formula even as the new amounts take effect in January 2027.