Mature couple sitting at table looking at paperwork. – Fg Trade Latin/Getty Images
While Social Security’s funding cliff continues to loom large for those who rely on benefits most, there could be good news for recipients in the short term. Social Security beneficiaries receive what is known as a cost-of-living adjustment, or COLA, which is a percentage on top of their monthly benefits amount that is designed to offset inflation. However, this percentage does not always align with consumer reality. For instance, in 2026 the COLA rate was set at 2.8%, a rate that not all retirees feel is enough in the current economy. However, according to a May 2026 estimate from The Senior Citizens League (TSCL), beneficiaries could receive a higher COLA adjustment of 3.9% in 2027 – a significant bump over the 2026 rate.
With that said, it’s important to understand the reasons for this increased COLA estimate. Namely, that it is largely tied to rising inflation rates across the country. The Bureau of Labor Statistics’ Consumer Price Index (CPI) -– which measures cost increases across consumer goods –- found that prices had increased 3.8% in April 2026 when compared to the 12-months prior. Even more telling, 40% of the all items increase in April came specifically from energy prices. In fact, during the 12 months that ended in April, the energy index increased 17.9%, with much of this tied to the oil supply crisis as a result of the Iran War.
Read more: Retirement In 1960 Looked Completely Different. Here’s What Changed
What’s next for COLA estimates
The Social Security logo on the exterior of a building. – Mattgush/Getty Images
Per TSCL, rising gas prices in 2026 are likely to create a domino effect that impacts the costs of other necessities like food –- adding additional strain for a demographic largely reliant on fixed incomes. With that said, there can be a lot to understand about how COLA is calculated, and how TSCL’s estimate could still change significantly before the official COLA rate is announced in October 2026.
As Alex Moore, a statistician for TSCL, explained to CBS News, “As we go throughout the year, rising oil prices have the potential to worsen the situation. Higher energy prices make it more expensive to farm crops, transport goods and services, and even operate the machinery to produce goods in factories.” However, this situation is likely to only get worse throughout 2026. As Moore explained, “So the inflation we’re seeing from rising oil prices right now is likely just the tip of the iceberg, with downstream effects on inflation across the whole economy — and thereby seniors — yet to come.”
All told, if you consider that the average Social Security benefits payment in January 2026 was $2,071, per the SSA –- even receiving a 3.9% COLA boost in 2027 would only add $80.77 to a monthly check. While this is not nothing, it is doubtful it would combat the kind of across-the-board inflated prices that are likely coming in the second half of 2026. With that said, depending on just how much worse inflation gets, it’s likely this projected COLA rate will continue to change.
