Many retirees eagerly watch for news of the cost-of-living adjustment each year. The COLA results in a benefits increase in most years that is supposed to help retiree benefits keep pace with inflation.
Since seniors rely on their Social Security, and many feel they aren’t getting enough income from benefits in the first place, finding out how much benefits are increasing is important for seniors who need to make budgeting plans for the upcoming year.
The official COLA announcement is not coming until October, though, so retirees have a long time to wait. Experts have made predictions about what’s coming that can shed some light on future income for seniors, but there’s wide variation in their projections, which could leave some seniors confused.
Experts are divided on the next Social Security COLA amount
There are currently two major estimates for the Social Security COLA that’s coming in 2027:
- The Senior Citizens League estimates that benefits will increase by 3.8% in 2027.
- Mary Johnson, a retired Social Security and Medicare policy analyst, has predicted that the COLA will result in a benefits increase of 4.7% or more next year.
This is a big discrepancy, and it is likely driven by different projections for how inflation is trending. In making her prediction, Johnson noted that the index is increasing at the fastest pace since 2022. “This is hard to quantify as it hits consumers now, but it clearly is causing enormous cost pressures, especially difficult for low-income and older Americans living on fixed incomes,” Johnson said.
While the Senior Citizens League is still predicting a large benefit increase (by comparison, retirees received a 2.8% COLA this year in 2026), their analysts are not predicting that inflation will continue to surge at the same levels as Johnson expects. As a result, their projections for the future COLA are more conservative.
Understanding how the COLA is calculated is important
To better understand why experts are so divided on the COLA projections, it’s helpful to know how COLAs are calculated in the first place. The cost-of-living adjustment that retirees collect is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-W tracks the prices of a basket of goods and services. Third-quarter CPI-W data is collected by the Bureau of Labor Statistics, and the COLA is equal to the average year-over-year change.
While there are questions about whether CPI-W is the right index to use to calculate the COLA, the formula is aimed at trying to accurately measure how much prices are rising so benefits are able to keep pace and retirees don’t lose buying power.
If inflation continues to trend higher as the year goes on in light of continued geopolitical uncertainty or because of policy decisions like tariffs, retirees will receive a larger COLA. If inflation wanes when the conflict in Iran is resolved and oil prices are not as elevated as they have been, then the COLA projections will change, and retirees will instead receive a lower raise.
Third-quarter data includes July, August, and September CPI numbers, so retirees will soon know what the CPI-W index shows for one of the months included in the COLA calculation. This will make the estimates more accurate, giving seniors a better idea of what to expect when the official COLA announcement comes in October.
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