If you’re someone who receives benefits from Social Security, there may be a big question on your mind: What will the 2027 cost-of-living adjustment (COLA) amount to?
The purpose of Social Security COLAs is to help ensure that benefits are able to keep up with rising costs. And they’re pegged to an inflation index known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
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When there’s a rise in the CPI-W from one year to the next, Social Security benefits get an increase. When there’s a decrease or inflation stays flat, Social Security benefits stay where they aren’t. In other words, there’s thankfully no such thing as a negative COLA.
Earlier this year, Social Security benefits rose 2.8%. And many seniors are hoping for a larger boost in 2027.
We won’t have an official COLA number until mid-October. But based on what we know so far, here’s an idea of how much the average Social Security benefit might increase in the new year.
A decent boost could be in store
Even though Social Security COLAs are based on CPI-W readings from July, August, and September, it’s common for experts to offer projections before all of that data comes in. As of this writing, August’s CPI-W has not been released. But based on July’s data, there are a few working estimates we can look at:
The Senior Citizens League, an advocacy group, says the 2027 COLA could be 3.6%
Mary Johnson, an independent Social Security analyst, says next year’s COLA could be 3.4%
AARP projects a 3.5% COLA for 2027, coming in right in the middle.
Meanwhile, the average Social Security benefit today is $2,086. If we use AARP’s projection — not because it’s necessarily the most accurate, but because it’s the average of the three numbers above — the average benefit could rise by $73 a month in 2027. On an annual basis, that’s an additional $876.
The COLA itself doesn’t tell the whole story
You may be inclined to start planning your 2027 budget based on a $73 monthly raise. But before you do, there are a few things you should know.
First, since we don’t have a full set of inflation data, the numbers above still constitute a guess. If inflation cools a lot in September, next year’s COLA could be smaller (though there’s still a pretty good chance of it coming in higher than this year’s 2.8% increase).
Secondly, while the Social Security Administration (SSA) is set to release an official COLA in mid-October, you may not be able to calculate your actual raise until November if you’re enrolled in Medicare.
For people who are enrolled in Social Security and Medicare at the same time, the program’s Part B premiums get deducted from Social Security benefits automatically. If there’s an increase in the cost of Part B, it will eat into whatever COLA comes through.
Meanwhile, it’s often the case that official Medicare premiums aren’t announced until November. So even once you know what Social Security’s COLA is, you may have a few weeks where you’re still in the dark.
Have realistic expectations
Even if Social Security’s 2027 COLA is more generous than expected, it may not go as far as you’d like. The reason boils down to the inflation tie-in.
The only way for Social Security COLAs to be large is for inflation to pick up steam. So a larger 2027 COLA will come at the cost of higher price increases. In other words, that raise probably won’t improve your financial situation, even if it well outpaces whatever Medicare Part B increase arrives next year.
If you’re having a hard time making ends meet, it may be time to consider some lifestyle changes, difficult as they may be. You could experiment with a combination of reduced spending and part-time work and see if that does the trick.
While your Social Security check could rise by about $73 in the new year if you collect an average benefit, that doesn’t necessarily mean you’ll get to keep that amount in full. Be on the lookout for Medicare changes once the SSA announces a COLA so you have the full picture.