Anticipating Social Security’s 2027 Cost-of-Living Adjustment

Millions of Social Security recipients have gained insight into their potential 2027 cost-of-living adjustment (COLA) following the release of the second inflation reading crucial for determining next year’s increase. The Bureau of Labor Statistics reported a 3.5 percent rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) over the 12 months through August. The CPI-W reached an index level of 328.481 in August, which is important since it, rather than the headline inflation rate, is used to calculate the annual COLA.

The broader Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.4 percent in August compared to the previous month, and was 3.4 percent higher than the previous year.

Why It Matters

According to July data from the Social Security Administration, over 75.7 million people receive Social Security or Supplemental Security Income. The annual COLA determines how much their payments increase at the start of the following year to account for rising consumer prices.

The 2027 adjustment is receiving attention due to earlier inflation acceleration. In July, the CPI-W was 327.104, reflecting a 3.4 percent increase from July 2025.

Previous COLA adjustments include a 2.8 percent increase for 2026, 2.5 percent for 2025, and 3.2 percent for 2024. Notably, 2023 saw a substantial 8.7 percent adjustment following significant inflation earlier in the decade.

Before the August inflation report release, the Senior Citizens League anticipated a 3.6 percent COLA for 2027, down from earlier forecasts of 3.8 percent in prior months. The August forecast was based on July’s 3.4 percent annual increase in the CPI-W.

How Today’s CPI-W Affects the COLA

The annual CPI-W inflation rate should not be mistaken for the eventual Social Security COLA. Federal law mandates the Social Security Administration to compute the adjustment by averaging CPI-W levels for July, August, and September, then comparing against the same months from the last effective COLA year. The percentage change is rounded to the nearest one-tenth of 1 percent.

The third quarter of 2025 serves as the comparison point for the 2027 calculation. CPI-W was 316.349 in July 2025, 317.306 in August, and 318.139 in September, averaging 317.265, which resulted in the 2.8 percent COLA effective in 2026 compared to the 2024 figure.

July’s CPI-W reading of 327.104 kicked off the 2026 side of calculations. The August reading now provides the second component. September’s figure will finalize the three-month average, setting the 2027 COLA.

Estimating the COLA

The exact benefit rise remains uncertain. The Committee for a Responsible Federal Budget (CRFB) anticipated a 3.4 percent COLA next year based on recent inflation data, surpassing the 2.8 percent adjustment in 2026.

If a 3.45 percent COLA emerges from averaging July’s 3.4 percent and August’s 3.5 percent CPI-W increases, the average retired-worker benefit might grow by roughly $71.97 monthly or $863.60 annually.

Currently, the average retired worker receives $2,085.98 monthly, as per latest Social Security data, meaning a 3.45 percent hike would increase the average payment to approximately $2,157.95 monthly, or $25,895.36 annually.

Beneficiaries await more inflation data, with the Bureau of Labor Statistics poised to release the September Consumer Price Index report at 8:30 a.m. ET on October 14. This will include the necessary final CPI-W reading. The Social Security Administration will announce the 2027 COLA that same day.

The new adjustment will apply to benefits payable in December 2026, typically received in January 2027. Supplemental Security Income (SSI) payments will also increase aligning with the annual COLA.