The 2027 cost-of-living adjustment for Social Security benefits is 3.6%.
Social Security beneficiaries are getting a pay bump in 2027. The annual cost-of-living adjustment for next year is 3.6%. Driven by inflation, it’s the largest annual COLA since 2023. On average, Social Security retirement benefits will increase by $75 a month, according to the Social Security Administration. Also, getting a bump in 2027 is the full retirement age — those born in 1960 turn 67 next year and are the first cohort for whom full retirement age is 67.
Should clients wait until full retirement age or later to claim benefits? As Social Security expert Mary Beth Franklin, CFP®, spelled out in her session at Connections Conference 2026, the value of waiting from age 62 until age 70 to claim retirement benefits is a 77% increase in monthly benefits for life. And a larger base amplifies the annual COLA. “COLA is applied to the bigger base — so the raise every year is bigger,” she said.
The Impact of 67
Six seven isn’t just kid talk. The full retirement age (FRA) of 67, which applies to beneficiaries born in 1960 or later, affects other aspects of claiming Social Security. Franklin pointed out that for those with an FRA of 67, a bigger haircut of 30% applies if they claim retirement benefits early at 62. For example, someone entitled to $2,000 a month at full retirement age would receive $600 less each month if they claimed Social Security at age 62.
Earning delayed retirement credits of 8% a year from full retirement age to age 70 also gets a trim for those with an FRA of 67; with that time frame running just three years, they can earn a total of only 24% in delayed retirement credits. But that extra 24% earned by waiting until age 70 to claim retirement benefits would boost a full retirement age benefit of $2,000 a month by an extra $480 a month.
Age Is Just One Factor
Of course, it’s not just age that matters when helping clients figure out when to claim Social Security. Other factors such as health, continued employment and other retirement income sources come into play in the claiming decision. Marital status is a big factor, too. “For couples, it’s how to maximize the survivor benefit,” Franklin said. The higher benefit lives on after the first spouse dies, so having the higher earner increase their benefit by waiting to age 70 boosts the benefit for whichever spouse lives the longest.
Say the higher earner’s boosted monthly benefit at age 70 is $2,200 and the lower earner receives $1,200. If the higher earner is the surviving spouse, the higher earner will continue to receive $2,200; if the lower earner lives longest, the lower earner will switch from their $1,200 a month benefit to a monthly $2,200 survivor benefit, assuming they are at full retirement age or older when they switch. That higher benefit can make a big difference in the financial life of the surviving spouse, who could live many years longer than their deceased spouse.
Singles — those who never married or who divorced after fewer than 10 years of marriage — face a harder question of whether to wait until age 70 to claim, because there’s no surviving spouse to receive a survivor benefit. For many singles, it can make sense to claim their retirement benefit at full retirement age, Franklin said.
A Look at How American Retirees Rely on Social Security
With Social Security’s retirement trust fund currently expected to run dry in six years, American retirees could see their benefits cut by more than 20%. How reliant are Americans on Social Security? Jack VanDerhei, director of retirement research at Morningstar’s Center for Retirement & Policy Studies, ran analyses for The New York Times for four hypothetical households of different income levels and resources to illustrate the role that Social Security plays in their financial lives. “Any serious Social Security reform package should be scored on what it does to household retirement outcomes, not only on what it does to trust-fund balances,” said VanDerhei in the NYT article.
Financial Planning Review: 'Revisiting the Social Security Claiming Puzzle: Behavioral Preferences as Rational Explanations for Early Claiming’
Nearly one-fourth of workers claiming Social Security do so at age 62, while only one in ten wait until age 70, even though financial analyses often favor delay. In the September 2026 Financial Planning Review (Volume 9, Issue 3), a study examines whether early claiming can be a reasonable choice once household preferences enter the decision. The analysis focuses on three
patterns: closely linking retirement with Social Security claiming (“claim-retire linkage”), preferring to concentrate more consumption in the active early years of retirement (“front-loaded spending”) and being less willing to finance consumption by drawing down savings (“nest-egg reluctance”). The claim-retire linkage has the largest effect because waiting to claim also means continuing to work. Households that place a high value on retiring sooner relative to continued work can therefore find claiming at 62 optimal, while those indifferent to early retirement delay. According to the study, financial planners should assess these preferences rather than uniformly prescribe delaying benefits. Read more here.
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