Let’s be clear. History doesn’t really have much of an influence on what next year’s Social Security cost-of-living adjustment, or COLA, will be.
The current method of calculating the Social Security COLA was established in 1975. Since that time, COLAs have been implemented automatically by comparing consumer prices in the third quarter of one year with prices in the same period the prior year. So, the 2027 Social Security COLA will depend on inflation data from the third quarter of 2026.
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Since the modern COLA calculation method has been in place, the median annual increase has been 3%, with annual adjustments ranging from 0% to 14.3%.
Image source: Getty Images.
The Senior Citizens League, which provides one of the most closely watched and highly regarded Social Security COLA estimates, recently predicted a 2.8% increase in 2027. That would be exactly in line with the increase that was implemented for 2026.
However, it’s impossible to know for sure. And there are two big caveats to keep in mind.
The 2.8% estimate is based on what we know at this time. It includes current and projected inflation data, but it’s important to realize that we don’t have any of the inflation data that will actually be used in the COLA calculation. In fact, initial estimates for the 2026 COLA were far lower than the 2.8% we ended up getting.
Second, the 2.8% estimate was made before the Iran conflict escalated and energy prices soared. As of this writing (March 12), oil had risen by 65% in 2026 and by more than 35% so far in March alone.
This is significant because energy prices are not only a major component of the Consumer Price Index, which is used to calculate inflation, but also because they can exert inflationary pressures elsewhere in the economy. For example, rising fuel prices mean it will cost grocery stores more to transport their products, and this would likely be passed on to consumers in the form of higher prices.
With all of that in mind, we do have some historical context. In the early 1970s, OPEC imposed an oil embargo on the United States, which sent oil prices soaring and triggered an inflation spike. This is actually the situation that led to the automatic Social Security COLA process that remains in place. However, every situation is different, and we have no idea how long the current conflict might last.
