New inflation data out Wednesday suggests seniors will see a bigger bump in their Social Security checks next year.
The annual cost-of-living adjustment, or COLA, is projected to be 3.6%, increasing the average retiree’s monthly check by around $75. This year’s 2026 COLA of 2.8% bumped up the average benefit by $56.
If this projection holds, the 2027 COLA will be the highest in four years.
The forecast by the Senior Citizens League is based on inflation data released Wednesday, which showed consumer prices in July rose 3.4% over the prior year.
The COLA is calculated by averaging inflation data for the third quarter of the year — July, August, and September — and comparing that figure with the same data from the previous year, based on the Consumer Price Index (CPI) for all urban wage earners and clerical workers (CPI-W).
The Social Security Administration is expected to announce the 2027 actual COLA in mid-October, after the release of the September CPI data.
Will it be enough to keep pace with the real-world inflation seniors face? Healthcare, prescriptions, housing, and utilities are stubbornly high and continue to tick up even as other costs ease a bit.
Read more: How to protect your savings against inflation
“A low COLA is a real reduction in purchasing power for millions of Americans who are already struggling to keep pace with rising housing, food, healthcare, and everyday living costs.” Shannon Benton, executive director of the Senior Citizens League, told Yahoo Finance.
“Seniors experience inflation at the grocery store, at the pharmacy, in their insurance premiums, and when they pay the rent,” she said. “That’s why the size of the COLA matters.”
AARP, which projects the COLA to come in slightly lower at 3.5%, says many retirees worry that prices are rising faster than their income.
“The COLA is not always a perfect reflection of the types of price increases that older people see, but it is typically the only inflation-protection they have,” said Rich Johnson, vice president for financial security at the AARP Public Policy Institute.
Add in the expected uptick in Medicare premiums and deductibles next year, which will be announced in the fall. These take a cut off the top each month since Medicare premiums are deducted from checks.
Part B premiums are projected to climb 3.5% in 2027, reaching $209.50 per month. Official numbers and final adjustments from the Centers for Medicare and Medicaid Services will be released in the fall.
While another price hike is never good news for retirees, the increase is a respite compared to the nearly 10% jump in 2026.
“Although consumer price data is cooling down, some categories are still growing, including outpatient hospital care (5.8%),” said Mary Johnson, a Social Security and Medicare policy analyst.
Nearly three-quarters of seniors depend on Social Security for more than half their income, according to the Senior Citizens League. About 44% of seniors depend on the program for all of their income.
“There is a lot of uncertainty still because we don’t know how prices will evolve over the next two months,” AARP’s Johnson added. “But this projection can help people plan for their spending next year. They should also recognize that it’s not set in stone.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky.
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