Retirees Could Get a Much Bigger Social Security Raise in 2027 Due to Inflation

Social Security’s payments are regularly adjusted to account for inflation.

This is determined by the changing price of everyday, ordinary goods and services.

The Social Security program will be required to fully match recent, significant price increases.

The prices of groceries, gasoline, and pretty much everything else seem sky-high these days and are getting higher. There's a silver lining to this cloud, however -- at least for some people. That is, since Social Security's monthly payments are adjusted for inflation, beneficiaries should see a sizable increase in their payments in the foreseeable future.

Just when you think price increases can't get any worse, the Bureau of Labor Statistics reported that the United States' annualized consumer inflation rate reached a three-year high of 4.2% in May, up from 3.8% in April. Food and fuel prices led the charge, although even without these two categories, prices were still up 2.9% year over year.

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And the nation's factories, assemblers, and packagers aren't feeling any less miserable. The BLS reported on Thursday that the U.S. Producer Price Index jumped 6.5% year over year last month, or a still-hefty 5.1% when excluding energy and food. Both figures are also at least three-year highs.

Of course, even if they didn't know the exact numbers, almost everyone who eats, owns a car, pays utility bills, or is looking for a place to live knows everything is now getting more expensive at an accelerated pace. Seniors and retirees who count on Social Security income that's less than what most working-age people earn may be feeling particularly pinched.