New Inflation Data suggesting that the Cost-of-Living Adjustment (COLA) for Social Security in 2027 may see a significant increase. The American Association of Retired Persons (AARP) has forecasted based on current data that the COLA for 2027 could reach 3.6%.
If this prediction holds true, it would be the largest adjustment since 2023, surpassing the 2.8% COLA in 2026. For retirees feeling the pressure of rising prices, a higher adjustment can provide some relief. The official COLA is expected to be officially announced in mid-October after the government releases the September inflation data, and it will take effect starting January 2027.
Currently, the average monthly Social Security benefit for retired workers in the United States is around $2,085 to $2,086. With a 3.6% adjustment, it means an increase of approximately $75 per month on average next year, raising the monthly benefit to about $2,160. The actual increase will vary depending on individual benefit amounts.
However, this additional income may not fully offset the rising cost of living. Medicare Part B premiums, typically deducted directly from Social Security benefits, retirees still need to cover costs for prescription drugs, housing, food, and other necessities. AARP points out that the inflation index used to calculate COLA may not fully reflect the consumption patterns of older adults, as they tend to allocate a larger proportion of their budget to healthcare.
The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the annual adjustment. The method compares the average index for July, August, and September of the current year with the average index for the same three months of the previous year. Data for July and August is already available, and the September data will determine the final result.
A larger COLA adjustment also highlights the long-term solvency issues of the Social Security program. According to the 2026 Social Security Trustees Report, if Congress does not take action, the Old-Age and Survivors Insurance Trust Fund (OASI) that pays retirement benefits and survivor benefits is projected to deplete its reserves by the fourth quarter of 2032. At that point, incoming revenue would only be sufficient to pay about 78% of scheduled benefits.
When considering the combined Old-Age, Survivors, and Disability Insurance program (OASDI), it is expected that the combined reserves will be exhausted by the third quarter of 2034, and at that time, ongoing revenues would still be able to cover approximately 83% of scheduled benefits. Payroll taxes will continue to flow into the system, but without Congressional intervention, full scheduled benefits may not be payable.
Experts caution that COLA is essentially an adjustment to account for inflation, not a real “raise.” The final numbers will still depend on the September inflation data release for confirmation.