Social Security's latest COLA may fall short for retirees. Here's why.

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The Social Security Administration announced a 3.6% cost-of-living adjustment (COLA) for 2027.

It's the largest increase since 2023 and among the top 20 largest adjustments since 1975. But senior advocates say this raise is coming too late and won't be enough to help retirees keep up with the pressure of rising costs.

The Senior Citizens League's executive director, Shannon Benton, says seniors will find themselves disappointed when they look up the COLA announcement.

"When inflation spikes due to a geopolitical event like the Iran war, seniors pay the price. Prices go up today, but benefits stay the same for months due to an outdated COLA methodology," Benton said in a statement. "Working people can request a raise or seek a higher-paying position, but seniors have to make lifestyle cuts or drain their savings until the next COLA."

How much more retirees will get, and why advocates say it may not be enough

The Social Security Administration says the increase will add about $75 a month to retirees' monthly benefit payments, boosting the average payment from $2,087.52 to $2,162.67.

The problem, experts note, is that the COLA adjustment calculation is usually a little late to the game.

The Social Security COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which tracks changes in the price of goods and services based on the spending habits of working households rather than retirees. It compares average CPI-W figures for July, August, and September with the same period a year ago to determine the appropriate benefit adjustment.

Once that adjustment is determined, beneficiaries won't see it reflected in their monthly payments until the start of the following year. In that time, prices can continue to rise, leading to a perpetual cycle of adjustments that fail to have a meaningful impact.

The adjustment is "supposed to offset inflation, but it under-measures it," Nancy Altman, president of Social Security Works, a nonprofit advocacy organization, told Yahoo Finance's Kerry Hannon, citing the war in Iran and tariffs driving costs higher. Read more about the math behind the hike .

According to TSCL's 2026 Senior Survey , 89% of respondents said the 2026 COLA was too low and felt their benefits would fall behind inflation.

"Congress cannot control every price increase, but it can act to ensure that the COLA formula does not leave people behind," Benton said. "The people who depend on these benefits cannot afford another year of empty promises, inadequate adjustments, and shrinking purchasing power. They deserve more than a cost-of-living adjustment on paper; they deserve one that works in real life."

There's no telling when and if lawmakers will act to improve the COLA formula to account for real-time changes in the cost of living. However, there are ways retirees can maximize their benefits and protect their purchasing power.

Consider a high-yield account to earn interest: Consider keeping some or all of your Social Security payments in an interest-bearing account to earn interest on your payments. Many banks and credit unions are currently offering high-yield savings accounts and CDs that offer rates of up to 4%.

Look for ways to lower healthcare costs: Medicare's open enrollment period runs through Dec. 7. Use the Medicare Plan Finder tool to compare your coverage options during open enrollment, add your prescriptions and pharmacies for personalized drug-cost estimates, and see if you qualify for assistance with healthcare expenses.

Delay claiming your benefits to get the maximum benefit: You can start claiming your benefits as early as age 62; however, holding off on claiming your benefits until age 70 will allow you to collect a bigger monthly benefit. Claiming at 62 gives you access to money sooner but locks you into a smaller monthly benefit. At 67, you can claim 100% of your benefit. If you can afford to wait, claiming your benefits at age 70 generally boosts that amount to 124%.

Check spousal benefits: You may qualify for Social Security based on a spouse's or former spouse's earnings record. An ex-spouse can potentially qualify for spousal benefits if the marriage lasted at least 10 years and other eligibility requirements are met. If you're eligible for both your own retirement benefit and a spousal benefit, Social Security generally pays your own benefit first and adds a spousal benefit, if applicable, to bring your total up to the higher eligible amount.

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