A More Generous Social Security COLA Could Be on the Way. Here’s What Might Stop It.

If there’s one announcement seniors on Social Security tend to wait eagerly for each year, it’s news of a cost-of-living adjustment, or COLA.

Social Security benefits are eligible for a COLA each year. And many retirees are reliant on those raises to keep up with their bills.

In 2026, Social Security benefits got a 2.8% COLA. And initial estimates are calling for an even larger COLA in 2027. But there’s one thing that could get in the way of that happening.

Why the 2027 Social Security COLA forecast just increased

Social Security COLAs are based on inflation. When inflation is strong, benefits tend to get a larger boost.

Meanwhile, oil prices have been elevated since the Iran conflict broke out. As a result, consumers are paying a lot more for gas.

But that’s not all. Higher fuel costs are also driving up the cost of consumer goods and services. So things are more expensive on a whole, even for people who don’t drive.

Fuel prices have risen so drastically that in March, the Consumer Price Index rose 3.3% on an annual basis.

Following the release of that data, independent Social Security and Medicare analyst Mary Johnson put out an estimate of next year’s Social Security COLA. And her number was 3.2%. If she’s correct, seniors could see a significantly more generous boost to their monthly benefits in 2027 than in 2026.

Why that higher COLA estimate may not hold up

If you’re a Social Security recipient, you might love the idea of getting a 3.2% COLA next year. But don’t start banking on it just yet.

For that 3.2% COLA projection to be accurate, inflation will need to remain elevated through the third quarter of the year, since that’s the period Social Security COLAs are based on. If fuel prices come down in the coming months and inflation cools, next year’s Social Security raise may not be as high.

Where does that leave you and others like you? It’s generally not a great idea to count on any given COLA until it becomes official. And even then, Social Security COLAs have historically done a poor job of helping seniors maintain their buying power.

If you’re having a difficult time making ends meet and are worried that things might get worse in 2027, don’t just look to an upcoming COLA to change your circumstances. Instead:

• Reassess your budget to see if there’s room to cut back on spending
• Consider a part-time job or gig work to score an extra paycheck
• Look into relocating to a less expensive ZIP code
• Rent out space in your home if you have rooms to spare, or consider moving in with another family member to save on housing expenses
• Unload your car if you drive minimally to save on maintenance, insurance costs, and monthly payments (public transportation and ride sharing may be a lot cheaper)

There’s a good chance Social Security benefits will receive some sort of boost in 2027. Whether it ends up being 3.2% or somewhere in that vicinity is anyone’s guess at this point, though.