One of Social Security’s most anticipated announcements is the annual cost-of-living adjustment (COLA). There are a few exceptions, but in most years it boosts benefits for Social Security recipients, which is always a good thing. It’s a way to ensure that Social Security benefits keep some of their purchasing power with rising inflation.
The official COLA number won’t be released until October, but some organizations keep an eye on relevant data and make estimates accordingly. Let’s take a look at what the 2027 COLA could potentially look like.
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How the annual COLA is set
The COLA is set based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a monthly metric released by the Bureau of Labor Statistics. Social Security uses the average CPI-W for the third quarter (Q3), compares it to the previous year’s Q3 average, and sets the COLA as the percentage increase.
For example, the Q3 average in 2025 was 2.8% higher than the 2024 average, resulting in a 2.8% COLA for this year. However much higher the Q3 average is this year than last year, that’s where the 2027 COLA will be set.
The good news is that if the CPI-W decreased from the previous year, Social Security won’t reduce your monthly benefit — it can only be increased.
Estimate for the 2027 COLA
The Senior Citizens League (TSCL) — a bipartisan senior advocacy group — estimates that the 2027 COLA will be 4%. If that turns out to be true, it would be the 16th-highest COLA since 1977, when Social Security started calculating the COLA based on CPI-W numbers. Below are the past 10 COLAs:
- 2026: 2.8%
- 2025: 2.5%
- 2024: 3.2%
- 2023: 8.7%
- 2022: 5.9%
- 2021: 1.3%
- 2020: 1.6%
- 2019: 2.8%
- 2018: 2%
- 2017: 0.3%
No doubt, a 4% COLA would be appreciated by retirees since it would be the highest since 2023, but it would also mean that inflation is higher than it has been over the past few years.
Don’t take estimates as the end-all, be-all
It’s important to remember that this estimate is just that: an estimate. We won’t know what the official 2027 COLA is until Social Security releases the number in October. Estimates can be made based on current numbers, but there can’t be an official number until CPI-W numbers from September come in and the Q3 average can be calculated.
Regardless of the amount of the official COLA, Social Security recipients should prepare for the benefits boost not to perfectly offset the inflation they may face. Social Security benefits have been losing their purchasing power over the years, and unfortunately, there’s no sign of that stopping anytime soon.
