Social Security provides important benefits for
seniors, and many retirees rely on these benefits to cover essentials. Since
Social Security is intended to help seniors support themselves when paychecks
stop, it’s important that these benefits maintain their value over time.
Cost-of-living adjustments, or COLAs, are built into the program to try to
ensure that the value of Social Security checks doesn’t erode due to inflation.
And while the COLA formula is far from perfect, it does provide beneficiaries
with an income boost in most years.
We won’t know exactly how large that increase will be for 2027 until October,
but early estimates can give us an idea. Here’s what we know so far.
How is the COLA calculated?
Before diving into the COLA estimates, it’s worth taking a quick look at how the
cost-of-living adjustment is calculated. Knowing this info helps you understand
where the estimates come from.
The COLA is calculated using third quarter data from the Consumer Price Index
for Urban Wage Earners and Clerical Workers (CPI-W). CPI-W measures the cost of
a basket of goods and services. If CPI-W shows a year-over-year increase during
the months of July, August, and September, you get a COLA equal to the average
percentage increase during the relevant months.
Since CPI-W data is collected throughout the year, experts examine trends in
this data to estimate what the COLA will be for the upcoming year. That’s why
we have estimates before the official announcement.
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These are the current 2027 COLA estimates
The Senior Citizens League (TSCL), a senior advocacy group, provides an estimate of the
COLA each month. For 2027, TSCL is now estimating a 3.6% COLA as of mid-August.
Mary Johnson, an independent Social Security analyst, on the other hand,
estimates the COLA at 3.4%.
These numbers are fairly similar, and both indicate that the cost-of-living
adjustment will be slightly higher next year than this year. In 2026, retirees
received a 2.8% COLA, up from 2.5% in 2025 and down from 3.2% in 2024.
Why the estimates have recently changed
The current COLA estimates are slightly lower than the recent projections. For
example, Johnson had projected a 3.7% COLA in July and a 4.7% COLA in June. The
estimates have been revised downward because, while inflation surged earlier
this year, it’s begun to moderate in the most recent CPI reports.
Since the COLA estimate is directly linked to an actual measure of rising
prices, changes in the inflation rate profoundly impact both projections for the
benefit increase and the actual increase. If inflation appears to be
stabilizing, the COLA will be smaller.
Uncertainty is the name of the game right now
The inflation numbers have been fluctuating, as have the COLA estimates, due to
significant uncertainty right now.
Inflation had largely surged because the conflict in Iran pushed up oil prices.
If the conflict is resolved, then oil prices may be lower than expected, and
inflation could cool. On the flip side, if the President puts many new tariffs
in place, prices could rise again, and the COLA would increase.
The more turbulent the economic and political conditions are, the more likely it
is that there will be a COLA surprise.
What does a COLA really do for you?
While retirees may be disappointed to see that the COLA numbers have moderated,
they shouldn’t be. A COLA isn’t like a traditional raise, and getting more money
isn’t a good thing. It just means that inflation is higher. And since retirees
don’t have inflation protection across all income sources, that’s generally not
a good thing. Seniors on fixed incomes don’t tend to benefit from rapidly rising
prices.
There is also concern among experts that COLAs aren’t actually keeping pace with
inflation because the CPI-W is used in the formula. The spending habits of urban
wage earners and clerical workers differ from those of seniors, so the COLA
formula may underestimate the actual price increases seniors experience, as
retirees tend to spend more on high-inflation items like medical services.
The Senior Citizens League estimates that benefits have lost 13.7% of buying
power since 2016, which means retirees are falling behind even though they
aren’t supposed to be. If inflation continues to surge at above-average levels,
that could put them at further risk.
Bottom line
These estimates can be helpful in making your retirement plan for the
upcoming year, but ultimately you need the official data to know what your raise
will look like.
August CPI numbers will be released on September 11, and September numbers will
be released on October 14, 2026, so retirees will soon have real answers. Once
they know what their Social Security income will look like next year, they can
plan accordingly. Until that time, it’s helpful to keep an eye on estimates and
to make sure you understand the truth about what the COLA can do for you.
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Author Details
Christy Rakoczy Bieber
Christy Rakoczy Bieber is an attorney turned personal finance writer who has spent 17 years helping readers understand Social Security: the claiming rules, the policy shifts, and the fine print that can mean thousands of dollars in lifetime income. Her work has appeared in Kiplinger, Forbes, The Motley Fool, and the Wall Street Journal.
