The Social Security cost-of-living adjustment for 2027 could rise for millions of recipients due to higher inflation and gas prices.
What is the estimated increase in Social Security cost-of-living adjustment?
Independent Social Security and Medicare analyst Mary Johnson predicted that the 2027 cost-of-living adjustment could reach to 3.2% as gasoline prices continue to soar. That figure is a 1.7% cost-of-living increase from her March projection, according to CNBC.
Johnson’s prediction was based on March consumer price index data, released on Friday. The findings revealed that inflation has reached its highest level in nearly two years, largely due to the war in Iran.
Social Security and Supplemental Security Income recipients receive benefit adjustments each year through the cost-of-living adjustment, ensuring that higher inflation does not adversely affect their benefits, per CNBC.
Should Social Security benefits be capped for some seniors?
The Senior Citizens League predicted that the cost-of-living adjustment could increase to 2.8% under a new proposal that would cap benefits at $50,000 per person or $100,000 per couple. The figure would remain the same as the 2026 cost-of-living adjustment.
Blavity reported that the Social Security trust fund is predicted to run short in 2032, and recipients could see a 24-28% cut in their monthly benefits. In response, the nonpartisan Committee for a Responsible Federal Budget, based in Washington, D.C., launched the Trust Funds Solutions Initiative in late March to improve Social Security solvency by raising benefit levels.
While this would cap benefits for the highest earners, the plan received pushback from experts and seniors who receive Social Security benefits each month. TSCL Executive Director Shannon Benton responded to these concerns with her own suggestions on how recipients could keep their benefits while strengthening the system.
What are experts saying?
“Rather than taking away benefits from people who have paid into the system their entire working lives, we should focus on strengthening America’s pension system,” Benton said.
She continued, “Seniors tell us over and over that their benefits don’t go as far as they used to, and many younger people worry if the program will have atrophied to a shadow of its former self by the time they reach retirement age, even as taxes on their wages cover today’s benefits.”
Social Security and Supplemental Security Income recipients receive benefit adjustments each year through COLA, ensuring that higher inflation does not affect their monthly payments. However, even with increased benefits, many seniors are still struggling to stay afloat, CNBC and Blavity reported.
“Americans are right to worry about our current COLA projection. The fact is that most senior households already get by on only about 58% as much income as their working-age counterparts, and you’d be hard-pressed to find a middle-class or working-class American who thinks the economy is doing well right now, especially as oil prices rise,” Shannon said.
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