Social Security beneficiaries could receive a cost-of-living adjustment (COLA) of between 3.4% and 3.6% in 2027, according to early estimates based on the latest government inflation data.
The Social Security cost-of-living adjustment is an annual increase designed to help Social Security and Supplemental Security Income benefits keep pace with inflation. The Social Security Administration typically announces the official COLA for the following year in October.
New July inflation data led independent Social Security and Medicare policy analyst Mary Johnson to estimate that the 2027 COLA could reach 3.4%. Her latest forecast is lower than her previous estimate of 3.7% in July and 4.7% in June, as inflation has shown signs of moderation.
“A moderation in inflation has resulted in bringing down my estimate from higher peaks earlier this year,” Johnson said.
Despite the lower projection, the expected increase remains above the long-term Social Security COLA average of around 2.6%. Over the past decade, COLA increases have averaged approximately 3.1%, with higher adjustments recorded during periods of elevated inflation, including 5.9% in 2022 and 8.7% in 2023.
Experts provide different COLA forecasts
The Senior Citizens League, a nonpartisan senior advocacy group, estimates that the 2027 Social Security COLA could be 3.6%. The organization had previously projected a 3.8% increase in both June and July.
Meanwhile, AARP estimates the 2027 COLA could be around 3.5% based on the latest inflation data. According to the organization, that increase would raise the average retired worker’s benefit by approximately $73 per month.
However, all current projections remain preliminary. Inflation trends over the next two months will play a key role in determining the final adjustment announced by the Social Security Administration.
How the Social Security COLA is calculated
The annual Social Security COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The adjustment is based on the average CPI-W data from the third quarter of the current year compared with the third quarter of the previous year.
Government data released Wednesday showed that CPI-W increased 3.4% over the previous 12 months through July. The broader Consumer Price Index also rose 3.4% during the same period as inflation continued to moderate.
The final 2027 COLA will depend on inflation readings for July, August and September. The Social Security Administration will use the average third-quarter CPI-W figures to determine the official benefit increase.
