Starting in January, the 55 million Social Security recipients will receive a 3.6 percent increase.
About eight million people who receive Supplemental Security Income, the disability program for the poor, also will receive the same increase.
The average monthly Social Security payment of about $13,000 a year will increase by close to $500.
The increase was announced Wednesday when the government released a key measure of inflation, which determines whether people who receive Social Security get a cost-of-living adjustment, or COLA.
There was no adjustment in 2010 or 2011 because inflation was too low.
This year, Social Security will pay out $727 billion in benefits to retirees, disabled people, surviving spouses and children, the agency said.
The Associated Press contributed to this report.