The Social Security Administration announced today that Social Security benefits will increase by 3.6% in 2027, reflecting higher inflation and boosting the average retiree’s annual benefits by about $900. On average, Social Security retirement benefits will increase by $75 per month, rising from $2,095 to $2,170.
This is the latest so-called cost-of-living adjustment (COLA) to social security payments and is the highest since 2022 when the COLA reached 8.7 percent.
According to the SSA: “Nearly 72 million Social Security beneficiaries will see a 3.6 percent cost-of-living adjustment (COLA) beginning in January 2027. Increased payments to about 7.3 million people receiving SSI will begin on December 31, 2026.”
Since 1975, COLAs have been automatic in legislation tied to the CPI-W price-inflation measure. Prior to 1975, any increases to Social Security payments were set by the adoption of new legislation. As with so much else in the federal government, what had once been a matter for legislative debate and public scrutiny is now determined by number crunchers within offices of federal bureaucrats.
Where will the money for this additional government spending come from? It will, of course, come out of the pockets of wage earners. Fathers and mothers working to support their families and their children will be taxed to send more money to retirees. Contrary to the perennial fact-free analysis offered up by current recipients of Social Security funds, the money currently being paid out by the Social Security administration is not the property of current recipients who insist that current Social Security funds are the property of retirees. In actual fact, all money coming out of the Social Security system right now is the property of current taxpayers who are being forced to pay taxes to support retirees. There is no magical pot of money somewhere from which current Social Security payments come. These payments come from current workers. Thus, any increase to Social Security payments amounts to taking food out of the mouths of the children of taxpayers.
The only reason that cost-of-living adjustments are even regarded as “necessary,” of course, is the fact that price inflation continues to rob ordinary people of the spending power of the dollar. So, every Social-Security dollar becomes worth less as the federal government and the central bank team up to inflate the dollar. To make this inflation more palatable to the key voting block that is pensioners, the government invented the automatic COLA to help lessen the political cost of price inflation.
This is why the COLA should be abolished altogether, however, so that the true effect of price inflation is not hidden behind automatic increases to federal largesse for retirees. Ordinary wage earners, of course, get no sort of automatic “adjustment” to their own earnings, and the latest price-inflation figures show that, yet again, average earnings are not keeping up with price inflation. Workers—the people who pay for the COLA—are getting poorer as we speak. All the while they are being taxed to pay for yet another increase for transfer payments for those on the dole.
