Early forecasts for the Social Security cost‑of‑living adjustment (COLA) in 2027 are rising, driven by a surge in inflation and soaring energy prices, according to new estimates.
This comes after the United States and Israel launched coordinated strikes on Iran on February 28. Iran then imposed restrictions on shipping through the Strait of Hormuz, a key global oil transit route that typically carries about 20 percent of the world’s oil and liquefied natural gas.
The disruption has pushed Brent crude oil prices up by more than 50 percent since the start of March, and now one analyst has predicted that COLA could be 3.2 percent in 2027, up from a 1.7 percent forecast in March and a 1.2 percent estimate the month before, according to a report by CNBC.
Why It Matters
More than 70 million Americans rely on Social Security benefits, many of them depending on these payments to cover their monthly bills. The annual COLA is designed to protect retirees and disabled workers from losing purchasing power as prices rise.
While a higher COLA means these Americans will receive larger monthly checks, it also indicates steeper costs for essentials like food, energy, housing and transportation are expected.
What To Know
Based on the CNBC report, Social Security and Medicare policy analyst Mary Johnson predicted the 3.2 percent COLA estimate for 2027 based on March consumer price index data, which was released on Friday.
A separate projection from The Senior Citizens League, a nonpartisan advocacy group, remains steady at 2.8 percent, unchanged from its earlier forecast. That would match the COLA beneficiaries received in 2026, according to federal data.
This comes as gas prices rose 21 percent in March, the largest monthly increase since 1967, according to a Bureau of Labor Statistics report released on Friday, while inflation was found to have climbed 3.3 percent in March, up from 2.4 percent in February, marking the largest yearly increase since May 2024.
Gas prices averaged $4.153 nationwide on Friday, according to American Automobile Association data, and California saw the highest prices at $5.916, with some cities seeing historically high costs.
COLA is calculated annually using inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI‑W.
Energy costs account for around 6.2 percent of the index, split between transportation fuel and household energy costs, meaning soaring energy prices as a result of the Iran war will likely have a notable effect.
What Happens Next
With several months of inflation data still to come, projections for the 2027 COLA remain fluid. If energy prices remain elevated through the summer, estimates could climb further.
