Millions of Californians will see their Social Security checks grow next year after federal officials announced a 3.6 percent increase in benefits Wednesday. It's an increase that some experts say doesn't go far enough in cover soaring costs of living — especially in the Golden State.
The increase will amount to an additional $75 per month for the average retiree, according to the Social Security Administration. That will raise average monthly benefits $2,095 to $2,170. Higher payments begin in January, although increases in Medicare premiums could consume some of that additional money.
About 6.8 million Californians receive Social Security benefits.
Nationally, nearly 72 million Social Security recipients will receive the cost-of-living adjustment, or COLA, beginning in January 2027. Another 7.3 million people receiving Supplemental Security Income will see their payments increase beginning Dec. 31. Some people receive both benefits.
The cost-of-living adjustment, or COLA, for retirees and disabled beneficiaries is financed by payroll taxes collected from workers and their employers, up to a certain annual salary. That is set to increase to $192,300 in 2027, from $184,500 in 2026.
The increase comes as inflation continues to strain household budgets, particularly in California, where residents face some of the highest housing, transportation and other living expenses in the nation.
The Social Security Administration calculates its annual benefit adjustment using the Consumer Price Index, a federal measure of inflation.
The 3.6 percent increase will apply nationwide, regardless of differences in living costs between states.
California was ranked the state with the highest cost of living by U.S. News & World Report, with housing among the biggest factors.
According to Redfin, the national median rent was $1,785 last month. In Los Angeles, it was nearly $1,000 higher.
The disparity is even more pronounced at the gas pump.
As of Wednesday, the average price of a gallon of gasoline in California was $6.26, according to AAA. That's about 45 percent higher than the national average of $4.33 and nearly 67 percent higher than the $3.75 average in North Carolina.
And those costs continue to rise.
Inflation accelerated in September, with consumer prices increasing 3.7 percent compared with a year earlier, up from 3.4 percent in August, according to federal data.
Gasoline prices alone jumped 9.1 percent between August and September. Airfares rose 22 percent compared with a year earlier.
Senior advocacy groups highlight the COLA as a sign of older Americans' financial strain.
"There's a lot on the line financially right now for older Americans — one in five have no retirement savings, and more people feel financially insecure this year than last. That makes Social Security's cost-of-living adjustment critically important," AARP CEO Dr. Myechia Minter-Jordan told The AP.
Jaime Jakubczak, 68, of Buffalo, New York, retired at 55 but returned to work to cover rising property taxes. He called the 3.6 percent COLA "a pittance," saying high inflation, steep food and gas prices, and a local tax hike swallow it.
"We were getting ahead a little bit with the COLA based on inflation, but the inflation is so high that it doesn't offset what our COLA allowance is," he told The AP.
A September AARP poll shows most older adults agree: roughly three-quarters aged 50+ doubted a 3.5 percent 2027 COLA would keep pace with rising costs.
Lorrie Ufkin, a 71-year-old retiree living near Rochester, Minnesota, said the COLA fails to address her escalating health care expenses. These costs are expected to rise further at the end of the year as the Trump administration phases out a temporary Medicare Part D subsidy program designed to soften premium increases.
Ufkin said that her premiums and drug costs are also expected to rise, although the Centers for Medicare & Medicaid Services has projected a modest increase for most people.
The COLA "doesn't even meet what they're going to do for changes to Medicare," she told The Associated Press.
She said one of the medications both she and her husband take will go from $11 per month for each prescription, to $200 per month, after Republican administration changes made to older Americans' healthcare programs. She said that was "catastrophic."
Social Security faces a funding shortfall that could reduce benefits unless Congress acts. According to the 2026 trustees' report, the combined retirement and disability trust funds are projected to run out of reserves in 2034. After that, incoming revenue would cover about 83 percent of scheduled benefits.
The outlook is more urgent for retirees. The trust fund that pays retirement and survivor benefits is projected to exhaust its reserves in 2032, leaving enough revenue to cover just 78 percent of promised payments. Benefits would not disappear, but recipients could face substantial cuts.
Congress has yet to agree on a solution. One proposal would eliminate the cap on earnings subject to Social Security payroll taxes, requiring higher earners to contribute more. The Peterson Foundation estimates the change could generate roughly $3 trillion over 10 years.
Recent legislation has also affected Social Security's finances. A law signed by President Joe Biden in January 2025 expanded benefits for about 2.8 million former public workers, while President Donald Trump's 2025 tax law provided temporary tax deductions for eligible adults 65 and older. Both measures improved finances for some older Americans but added to the program's long-term funding pressures.
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The Associated Press contributed to this report.
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