As inflation continues to run hotter than the Federal Reserve’s 2% annual target rate, Social Security beneficiaries are poised to see the highest cost-of-living adjustment in years, according to new projections.
The official cost-of-living adjustment, or COLA, for 2027 is scheduled to be announced on October 14, after the government releases one more month of inflation data. But the latest estimates, which factor in today’s inflation report, say the 2027 COLA should be 3.5% to 3.6%, the highest since an 8.7% increase announced for 2023. The increase would take effect in January.
The increase for 2026 was 2.8%, lower than the annual inflation rate reported every month since March. The COLA for 2025 was 2.5%, following a 3.2% boost for 2024.
AARP said Friday that it now forecasts a 3.6% adjustment for 2027, which would boost the average retired worker’s benefit by $75 a month. The new estimate is up from 3.5% in August.
The Senior Citizens League, a nonpartisan group that advocates for senior benefits, said Friday that its forecast has shifted the other way. It now forecasts a 3.5% COLA for next year, down from 3.6% a month ago. That translates to an increase of $67.90 in the average benefit check, which would climb to $2,007.98.
The Social Security COLA is based on a specific measure of inflation, the change in the federal government’s “Consumer Price Index for Urban Wage Earners and Clerical Workers,” also known as CPI-W, from July, August and September of one year to the next.
“The biggest thing we’re watching with the COLA announcement coming are short-term shocks to the economy that push inflation way up or down in the next 30 days,” Shannon Benton, executive director of The Senior Citizens League, said in a statement, adding that seniors will still feel squeezed by inflation whatever the final number is. “No matter if the COLA announcement comes in slightly higher or slightly lower than our prediction, seniors will probably end up disappointed in the long run.”