Social Security COLA Could Be 3.6% in 2027, Latest Forecast Shows

Social Security beneficiaries could receive a larger cost-of-living adjustment in 2027 than they did this year, with The Senior Citizens League now forecasting a 3.6% increase.

The estimate was lowered from 3.8% after the latest inflation report, but it remains above the 2.8% COLA that took effect in 2026. If the 3.6% projection holds, it would be the largest Social Security adjustment since the 8.7% increase for 2023.

The 3.6% figure is not official. Social Security’s 2027 COLA will depend on inflation readings for July, August and September, and the final number will not be known until the third-quarter data are complete.

The 3.6% estimate is still a forecast

The Senior Citizens League said in its August 12 forecast that a 3.6% COLA would be 0.8 percentage points higher than the 2026 adjustment. Using the group’s average-benefit figure, a 3.6% increase would add about $69.75 a month, taking the average payment from $1,937.53 to $2,007.28.

The forecast moved lower as inflation cooled in July. The Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, rose 3.4% from a year earlier in July, down from a 3.5% annual increase in June. The CPI-W is the inflation measure used in the Social Security COLA formula.

The Senior Citizens League’s projection is slightly above the latest CPI-W reading because its model estimates how inflation could develop over the remaining months that matter for the calculation. The group said the gap implies that its model expects inflation to rise somewhat over the next two months.

Other forecasters are not all at the same number. MarketWatch reported Saturday that the estimates it reviewed ranged from 3.2% to 3.6%. That spread is a useful reminder that the final adjustment can still move with two of the three third-quarter CPI readings yet to be released.

Energy prices remain one source of uncertainty. The Bureau of Labor Statistics reported that the broad CPI rose just 0.1% in July on a seasonally adjusted basis, but the energy index was still 14.7% higher than a year earlier. Gasoline prices were up 24.6% over the same 12-month period even after falling during July. Changes in fuel costs can affect the CPI-W directly and can also influence transportation and production costs elsewhere in the economy.

How the 2027 COLA will actually be calculated

Social Security does not base the annual COLA on a single month’s inflation rate. Under the statutory formula, the government compares the average CPI-W level for July, August and September with the average for the same three months in the previous year. If the current third-quarter average is higher, the percentage increase becomes the COLA, subject to the program’s calculation rules.

That makes July’s 3.4% year-over-year CPI-W reading an early indicator rather than the answer. The August CPI report is scheduled for September 11, and the September report is scheduled for October 14. Once the third-quarter data are complete, the Social Security Administration can determine the 2027 adjustment.

The COLA is intended to keep inflation from eroding the purchasing power of Social Security and Supplemental Security Income benefits. Automatic annual adjustments began in the 1970s after Congress tied benefit increases to the CPI-W.

A 3.6% increase would be larger than each of the last three COLAs. Benefits rose 3.2% for 2024, 2.5% for 2025 and 2.8% for 2026. The 2023 adjustment was much larger at 8.7%, reflecting the inflation surge that followed the pandemic.

A higher COLA is not the same thing as a discretionary raise. The payment rises because the cost of living has risen. For beneficiaries, there is also a timing lag: inflation occurs during the year, the third-quarter data set the adjustment, and the new Social Security benefit amount generally takes effect with benefits payable for December and received in January.

What a 3.6% COLA could mean for monthly benefits

The dollar effect would depend on each recipient’s existing benefit. Social Security Administration data for July show that the average retired worker received $2,085.98 a month. Applying 3.6% to that figure as a simple illustration would equal roughly $75 more per month before deductions. An individual’s actual increase would depend on the benefit amount to which the final COLA is applied and Social Security’s rounding rules.

For all Social Security beneficiaries, the average July payment was $1,940.08. The agency reported 71.3 million Social Security beneficiaries that month. Counting people receiving Social Security, Supplemental Security Income, or both, the total number of beneficiaries was about 75.7 million.

Medicare costs will also matter for many retirees when they assess how much of the COLA they actually keep. The standard Medicare Part B premium is $202.90 a month in 2026. The 2026 Medicare Trustees Report projects a standard Part B premium of $209.50 for 2027, an increase of $6.60, although that 2027 figure is still an estimate rather than the final premium.

For beneficiaries who have Part B premiums deducted directly from Social Security, a higher Medicare premium can absorb part of the gross COLA increase. The effect differs by beneficiary, and higher-income enrollees can pay more than the standard Part B premium.

The CPI-W also does not mirror every retiree’s personal spending pattern. Older households may devote different shares of their budgets to housing, medical care and other expenses than the wage-earner population represented by the index. That has fueled a long-running debate over whether another inflation measure would better reflect older Americans’ costs, but current law continues to use the CPI-W.

The next major checkpoint is September 11, when the government is scheduled to release August CPI data. The decisive release is scheduled for October 14, when September inflation figures will complete the three-month window used to set the 2027 Social Security COLA.