Experts Forecast Social Security COLA Jumps of 3.8% and 4.7%
Predictions for the 2027 Social Security cost of living adjustment (COLA) keep on climbing as workers and retirees continue struggling to afford spiking gasoline prices and day-to-day costs.
The Senior Citizens League (TSCL) forecasts a COLA of 3.8%, while independent Social Security and Medicare Policy Analyst Mary Johnson predicts figures of 4.7% or even higher.
Today’s inflation report from the Bureau of Labor Statistics (BLS) showed the highest level of inflation since early 2023. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) jumped 4.2% over the last 12 months, while the index for gasoline increased 40.5% over the past 12 months and 7% over the month of May.
Inflation, as measured by the index, is growing at its fastest pace in four years, estimates Johnson. “This is hard to quantify as it hits consumers now, but it clearly is causing enormous cost pressures especially difficult for low income and older Americans living on fixed incomes,” she said.
On a monthly basis, inflation increased 0.5% in May, following rises of 0.6% in April and 0.9% in March.
The BLS data also reported suppressed wage growth when compared to inflation figures. According to the data, the increase of inflation has exceeded rises in wages for the second month in a row. “Social Security recipients received a 2.8% COLA this year raising average monthly benefits of $2,000 about $56, but would need $94 per month to keep up with May inflation,” added Johnson.
TSCL notes that if a 3.8% COLA went into effect, the average benefit for retirees would rise by $77 from $2,026.41 a month to $2,103.41—but still short of what it costs to live in the U.S. Currently, the average senior cost of living for one person is nearly $2,700 a month, even though the TSCL estimates that over half of seniors rely on less than $2,000 a month and 13% get by on less than $1,000.
“A 3.8% COLA might sound like a lot compared to last year’s 2.8%, but it won’t be enough to make up the difference between what seniors bring in and what they need to live with dignity,” said TSCL Executive Director Shannon Benton. “And that’s the point of the program: It’s to grant ‘some measure of perfection against the loss of a job and against poverty-ridden old age,’ as Franklin D. Roosevelt said when he signed Social Security into law 91 years ago. Are we really able to say we’re fulfilling that goal right now?”
Benton urged lawmakers to enact policies that would protect seniors from rising costs of living. “Congress and the President must raise benefits so seniors can meet basic cost-of-living standards, for the good of the entire country. When signing Social Security into law, President Roosevelt described the program as ‘a structure intended to lessen the force of possible future depressions’ and ‘flatten out the peaks and valleys of deflation and of inflation,’” she said. “In today’s world, with change coming faster than ever, most Americans would tell you that they agree.”
The COLA for 2027 is largely determined by inflation during the third quarter of the year. The Social Security Administration (SSA) will add inflation numbers for the months of July, August, and September, determine the average, and compare that number to the average from the previous year’s fourth quarter.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.