Social Security beneficiaries may receive a larger cost-of-living adjustment (COLA) in 2027, with estimates ranging between 3.4% to 3.6%, following the latest inflation data from August. The annual COLA is determined by the Bureau of Labor Statistics (BLS) using the consumer price index (CPI), specifically the CPI-W variant, which targets wage earners.
The most recent release indicates consumer prices rose by 3.4% over the past year, while the CPI-W recorded a 3.5% increase. Various organizations, including the nonpartisan Committee for a Responsible Federal Budget (CRFB) and AARP, have made predictions for the 2027 COLA based on this data. The CRFB estimates a 3.4% increase, while AARP projects it at 3.6%.
Rich Johnson, from the AARP Public Policy Institute, emphasized the importance of these estimates, noting that Social Security often serves as a primary income source for older adults. He highlighted the pressing need for beneficiaries to understand potential changes to their benefits to aid their financial planning amidst rising costs.
AARP’s calculations consider the Federal Reserve Bank of Cleveland’s inflation projections for September, yet Johnson cautioned that these figures could fluctuate. The final determination of the COLA will be based on September’s CPI data, set to be released on October 14.
The Senior Citizens League has also projected a 3.5% COLA, reflecting a slight decrease from earlier estimates. A COLA of this magnitude would mean an increase of approximately $67.90 in monthly benefits, raising average checks from $1,940.08 to $2,007.98. However, executive director Shannon Benton noted that irrespective of sentiment around the COLA, seniors may feel the long-term economic pressures differently due to varying budgetary factors compared to working-age individuals.
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