Social Security recipients could get a bigger monthly payment in 2027. The latest forecast puts the possible 2027 Social Security cost-of-living adjustment (COLA) at 3.5%.
The COLA is linked to the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. The government uses this inflation measure to calculate the annual increase. The calculation does not simply use the latest inflation number. Social Security looks at the average CPI-W readings for July, August and September. The third-quarter average is compared with the relevant figures from the previous year. Forecasts have already moved as inflation data changed. The official number will come after the required inflation data is available. The Social Security Administration will have to use the third-quarter CPI-W figures to determine the final COLA.
AARP gave the latest 3.5% estimate based on inflation data available so far. But 3.5% is not the final COLA. The 3.5% figure is only a forecast right now. The official 2027 Social Security COLA has not yet been announced. Inflation readings for August and September can still change the final 2027 COLA estimate. Earlier estimates were higher, but projections have generally moved toward the mid-3% range as inflation cooled. Over a full year, the difference would be roughly $25 for someone receiving the average retired-worker benefit. So even a small change in the COLA percentage can matter over 12 months. The 2027 increase would start with benefits paid in January 2027.
Because the government has not finished the inflation data needed to calculate the official increase, the estimate could still move up or down. Because they are used to determine the final COLA, those three months are important. July’s inflation data is therefore only the beginning.
The SSA says COLAs are designed to help prevent inflation from reducing the purchasing power of Social Security and Supplemental Security Income benefits.
If those expenses rise faster than overall inflation, a 3.5% Social Security increase may not feel like a 3.5% increase in purchasing power. For now, 3.5% is the key 2027 Social Security COLA forecast to watch. Other estimates, including the 3.6% projection from the Senior Citizens League, suggest the final number could be slightly higher. The remaining inflation data, especially the August and September CPI-W readings, will determine whether the 2027 COLA ends up at 3.5%, 3.6% or another figure.
Healthcare and housing costs can be especially important for retirees. The final number is still months away from being certain.
