When the Social Security Administration (SSA) announced last year that benefits would be getting a 2.8% cost-of-living adjustment, or COLA, for 2026, many retirees were disappointed. Next year’s raise is shaping up to be more substantial, though the picture has changed considerably since spring.
A bout of elevated inflation earlier in 2026 briefly pushed COLA forecasts as high as 4.7%. But since then, inflation has cooled, and independent analysts have revised their projections down into the 3.7% to 3.8% range for 2027.
What the current COLA projection looks like
In May, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 4.4% on an annual basis, with a 0.7% monthly gain. The CPI-W is the index the SSA uses to calculate Social Security COLAs. That hot reading prompted Mary Johnson, a seasoned independent Social Security analyst, to push her 2027 COLA forecast to 4.7% — a figure that would have ranked among the highest adjustments in decades.
The June CPI report changed the calculus quickly. The CPI-W increased just 3.5% on an annual basis in June, with the index falling 0.5% for the month. The overall CPI fell a seasonally adjusted 0.4% in June, bringing the annual inflation rate down to 3.5%, the largest monthly decline since April 2020. Johnson described the resulting drop in her own estimate — from 4.7% to 3.7% in a single month — as one of the largest month-over-month declines seen in June CPI data in five years.
The Senior Citizens League (TSCL) held its 2027 COLA estimate at 3.8% in its July 14, 2026 release, unchanged from the prior month and one full percentage point above this year’s 2.8% adjustment. AARP experts, meanwhile, are forecasting a 3.6% cost-of-living adjustment for 2027. All three figures represent a meaningful improvement over 2026, but none approaches the headline-grabbing numbers floated in late spring.
For context, here are the three COLAs that have exceeded even the upper end of today’s forecasts in the past 36 years:
- 8.7% announced in October 2022 (effective January 2023)
- 5.9% announced in October 2021 (effective January 2022)
- 5.8% announced in October 2008 (effective January 2009)
A larger Social Security COLA isn’t necessarily a good thing
A COLA above 3.5% might still seem like something to celebrate. But it signals a less favorable economic reality for retirees on fixed incomes. The purpose of Social Security COLAs is to help seniors keep pace with rising prices, and the only way for COLAs to run well above average is for inflation itself to run hot.
That is exactly what happened in the first half of 2026. Energy prices surged 15.7% over the year through June, with gasoline prices up 26.7%. Those gains filtered through the broader economy, pushing up the cost of transportation, goods, and services that retirees depend on. Consumer prices posted their biggest monthly decline in more than six years in June as a sharp swoon in energy prices provided temporary relief from the spring inflation surge.
There is some genuinely good news on the Medicare front. Medicare Part B premiums are forecast to rise 3.25% in 2027, below the projected 3.8% COLA for Social Security benefits. That matters because since 2024, Part B premium increases have outpaced COLAs, steadily eroding Social Security’s purchasing power. A reversal of that pattern would be a meaningful benefit for retirees enrolled in Medicare.
Still, this year’s 2.8% COLA has, in recent months, trailed overall inflation by a meaningful margin. For Social Security recipients, a more generous raise in 2027 remains cold comfort for price increases already absorbed in 2026.
It’s too soon to know what 2027’s COLA will be
Social Security COLAs are determined by averaging CPI-W readings from July, August, and September. As of early July 2026, the official measurement window that determines the final 2027 COLA figure has just opened. The SSA typically announces the official COLA in October, meaning there are still several months of data to come in before a final number is set.
Estimates for the Social Security COLA may still change if inflation fluctuates. Oil prices, which drove much of the spring spike, remain volatile amid ongoing tensions in the Middle East. A renewed energy price shock could push forecasts back up, while continued cooling would pull them lower.
On the legislative front, Congress reintroduced the Social Security 2100 Act, which would provide longer-term relief to seniors, raise the minimum benefit to 125% of the federal poverty line, and change the COLA calculation from CPI-W to the Consumer Price Index for the Elderly (CPI-E). GovTrack gives the 2026 bill a 0% chance of passing, but its reintroduction reflects growing frustration among advocates that the existing COLA formula does not adequately capture the spending patterns of older Americans.
Seniors on Social Security can reasonably expect a larger raise in 2027 than they received this year. But the size of that raise depends almost entirely on how inflation behaves through September. There is no way to decouple higher prices and higher COLAs. A more generous Social Security adjustment is, almost by definition, a signal that everyday costs have gotten harder to bear.
Editor’s note: This article has been updated to reflect the June 2026 CPI-W reading of 3.5%, which prompted Mary Johnson to revise her 2027 COLA projection from 4.7% to 3.7%, and TSCL to hold at 3.8%. The historical COLA figures in the article have also been corrected: the three COLAs that exceeded current projections since 1990 were 8.7% (announced October 2022), 5.9% (announced October 2021), and 5.8% (announced October 2008), not the rounded figures previously cited.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks