Social Security recipients may see a 3.6% cost-of-living adjustment (COLA) in 2027, the largest increase in four years, according to projections released Wednesday. The forecast follows the release of July’s Consumer Price Index (CPI) data, which showed a 3.4% annual inflation rate, up from 3.5% in June.
The Senior Citizens League, an advocacy group for older Americans, and AARP, a nonprofit focused on issues affecting people over 50, both adjusted their COLA estimates downward slightly from earlier projections. The Senior Citizens League now projects a 3.6% COLA, while AARP forecasts a 3.5% increase. Both groups cited the July CPI report as the basis for their revised estimates.
If confirmed, the 2027 COLA would raise the average retiree’s monthly benefit by about $75, increasing the average payment from $2,071 to approximately $2,146. The Social Security Administration is expected to announce the official COLA on October 14, after incorporating inflation data from July, August, and September.
How the COLA is calculated
The annual adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), specifically the average inflation rate for the third quarter of the year. The CPI-W measures price changes for a basket of goods and services, including food, housing, and healthcare. The Social Security Administration compares the third-quarter average to the same period in the previous year to determine the COLA.
Potential offsets to the COLA
While the projected increase is larger than the 2.8% COLA applied in 2026, advocates warn that rising costs in essential areas may still outpace the benefit adjustment. Shannon Benton, executive director of the Senior Citizens League, emphasized that seniors face persistent inflation in healthcare, prescriptions, housing, and utilities, which are not fully captured by the CPI-W.
“A low COLA is a real reduction in purchasing power for millions of Americans who are already struggling to keep pace with rising housing, food, healthcare, and everyday living costs,” Benton stated. She added that seniors experience inflation at the grocery store, pharmacy, and through insurance premiums, making the size of the COLA critical to their financial stability.
Medicare premiums and deductibles
Another factor affecting seniors’ net benefits is the expected increase in Medicare Part B premiums, which are deducted directly from Social Security checks. Projections suggest the 2027 Part B premium could rise 3.5% to $209.50 per month, further reducing the real-world impact of the COLA.
Historical context and long-term outlook
The 2027 COLA would be the highest since 2023, when beneficiaries received a 8.7% adjustment in response to elevated inflation. However, the current projection remains below the peak 9.1% COLA seen in 2022. The Social Security Trust Fund’s long-term solvency continues to be a separate policy concern, with discussions ongoing about potential reforms to ensure the program’s sustainability.
The official COLA announcement will follow the release of September’s CPI data, which will finalize the third-quarter average used for the adjustment.