Social Security recipients will see rise in monthly payments next year

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Data: Social Security Administration; Chart: Neil Irwin/Axios Social Security recipients will see the largest rise in their monthly payments in four years in January, with a 3.6% cost-of-living adjustment. Driving the news: The Social Security Administration announced the 2027 COLA adjustment for 76 million recipients of retirement and disability benefits, which by law is calculated based on the Consumer Price Index for the July-through-September quarter. That will increase the average retiree's benefits by $900 a year, or $75 a month. The agency also said that the cutoff for Social Security taxes will rise to $192,300 in 2027, from $184,500 this year. Income above that threshold is not subject to payroll tax. How it works: The adjustment is, by statute, determined by the year-over-year change in CPI for the third quarter. Thus, the September data released this morning was the final input needed to calculate the adjustment. Between the lines: The adjustment will mean more nominal income for seniors and disability recipients, amounting to a mild fiscal stimulus come January. However, it also accelerates Social Security's looming fiscal problems, with its trust fund scheduled to expire in six years. The most recent projections issued by the program's trustees assumed a 0.9 percentage point lower COLA for 2027, the Committee for a Responsible Federal Budget notes.