More than 75 million people nationwide receive Social Security or Supplemental Security Income benefits, or both, according to the Social Security Administration.
Nam Y. Huh/AP
As Americans continue to grapple with higher prices in the grocery store and at the gas pump, the cost of living remains a common topic of conversation. Many Social Security recipients are wondering what inflation could mean for next year’s benefits.
More than 75 million people nationwide receive Social Security or Supplemental Security Income benefits, or both, according to the Social Security Administration.
With inflation continuing to shape household budgets and expenses, many beneficiaries are looking ahead to the administration’s next cost-of-living adjustment, which determines whether monthly payments will increase.
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Related: Americans rewire their grocery shopping routines while digesting the biggest price jump in 50 years
Why do Social Security payments increase?
Under federal law, benefits increase when the cost of living rises, according to the Social Security Administration.
Each year, the Social Security Administration determines whether this should happen. These annual increases are known as cost-of-living adjustments, or COLAs.
In January, monthly Social Security benefits increased by 2.8%. Since 2020, annual cost-of-living adjustments have ranged from 1.3% to 8.7%, with the latter, which occurred in 2023, being the largest adjustment in years.
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For the average retired worker, the 2.8% increase raised monthly benefits from about $2,015 to $2,072, according to the administration’s website.
Related: Social Security checks for retired Texans could drop in 2032 if Congress doesn’t act
When do 2027 Social Security payments increase for inflation?
The Social Security Administration will announce the 2027 cost-of-living adjustment in October.
The annual COLA is determined using inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers. Specifically, the adjustment is based on the change between the third quarter of the previous year to the corresponding quarter of the current year.
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The Bureau of Labor Statistics publishes the data on a monthly basis, but the final COLA cannot be calculated until September’s inflation data is released. If an adjustment is made, the higher Social Security benefits typically begin with payments made in January.
Will Supplemental Security Income payments see the same increase for inflation?
Historically, SSI recipients receive the same cost-of-living adjustments as Social Security beneficiaries. However, because of differences in payment schedules, the SSI payment increases may go into effect at a different time than increases for Social Security benefits.
While both programs are administered by the Social Security Administration, they serve different populations and are funded separately.
Social Security is funded through payroll taxes with benefits based on an individual’s work history and earnings. Meanwhile, SSI is a needs-based program for people with limited income and resources who are ages 65 and older, blind or have a qualifying disability.
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More than 576,000 Texans receive Supplemental Security Income payments, according to data from the Social Security Administration.
Related: Why SSI recipients will get their August payment early
