Early estimates point to a lower amount
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Social Security benefits are usually adjusted each year to keep up with rising prices.
Social Security beneficiaries saw annual increases reach record COLAs in 2022 and 2023. 5.9% and 8.7%respectively. However, as the rate of inflation decreased, the size of the annual COLA increase also decreased.
The 2026 cost of living adjustment is 2.8%. This added an average of $56 per month for retirees, and higher Medicare premiums for some beneficiaries offset that increase.
Now, new government inflation data for January suggests the cost of living adjustment for 2027 could be even lower if the inflation rate remains the same in the coming months.
The 2026 COLA affects approximately 75 million beneficiaries, according to the Social Security Administration.
Estimates range from 1.2% to 3.1%
Mary Johnson, an independent Social Security and Medicare analyst, estimates that the Social Security cost-of-living adjustment could be just 1.2% in 2027. If this increase were to take effect, it would be the lowest COLA since the 0.3% increase in benefits in 2017.
Separately, the Seniors League, a nonpartisan senior group, is now It forecasts a growth of 2.8% The 2027 Social Security COLA is consistent with the benefit increase beneficiaries saw this year.
Meanwhile, the Congressional Budget Office to guess A 3.1% Social Security COLA for next year will be followed by 2.5% the following year as part of estimates for the program’s future costs.
Low COLA can ‘encrypt’ financial stress
The Senior Citizens Association states that if the COLA drops to 2.8%, “this paltry figure will only further increase seniors’ financial stress.” The group’s survey found that more than half of seniors (almost 58%) have skipped at least one healthcare product or service to cut costs in the past 12 months.
A separate September AARP research It found that a 3% COLA was “inadequate.”
The organization asked nearly 1,000 adults ages 50 and older what they thought of the 3% increase predicted at the time and found that 77% of respondents said it wasn’t enough to keep up with rising prices. Most respondents (72%) said the ideal benefit increase would be 5% or higher.
Of course, current COLA estimates are preliminary and subject to change.
The Social Security cost-of-living adjustment is calculated each year using third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. CPI-W data for the third quarter of this year was compared with the third quarter of the previous year. The percentage increase (if any) from one year to the next determines the COLA.
New CPI data for January shows CPI-W increased by 2.2% during the previous 12 months.
