...
By Aliss Higham
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Social Security beneficiaries could receive a smaller raise next year than previously expected as the forecast 2027 cost-of-living adjustment falls. But there may be a silver lining for retirees if the decline reflects a broader slowdown in the price increases eating into household budgets.
The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, now estimates that Social Security's 2027 cost-of-living adjustment, or COLA, will be 3.6 percent. That is down from the 3.8 percent the group projected in June and July, although it would still be 0.8 percentage points higher than the 2.8 percent adjustment that beneficiaries received this year.
If a 3.6 percent COLA were applied to benefits today, TSCL estimates that the average payment across retirement, survivor and spousal benefits delivered to about 68.5 million beneficiaries would increase by $69.75, from $1,937.53 to $2,007.28.
Read More on News
AARP also lowered its estimate this week. The advocacy group for Americans over 50 said on Wednesday that it now expects a 3.5 percent COLA in 2027, compared to its previous forecast of 3.6 percent.
Why Has COLA Forecast Lowered?
The revised predictions followed the latest inflation report from the Bureau of Labor Statistics on Wednesday, which showed that the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, was 3.4 percent higher in July than it had been a year earlier. The broader Consumer Price Index was also up 3.4 percent over the year through July.
July's reading is important for Social Security recipients, as it is the first of three months used to calculate the annual COLA. Inflation readings from July, August and September will ultimately determine the increase that takes effect at the start of 2027.
Nic Puckrin, the CEO of Coin Bureau and a former Goldman Sachs analyst, said the softer July reading had shifted expectations toward the lower end of recent forecasts.
"Today's CPI print is the first of the three months that set the COLA for 2027, and it came in soft. That pushes the COLA toward the lower end of the current estimate range between 3.6 percent and 3.8 percent," he told Newsweek. "However, August and September could still skew it back toward the upper end if tensions in the Middle East keep oil prices elevated."
The final figure could still move in either direction before the Social Security Administration (SSA) announces the official COLA in October.
TSCL Executive Director Shannon Benton said sharp changes in inflation throughout the year have made predicting the increase more difficult.
"One of the biggest challenges this year has been the sharp swings in inflation," she said in a news release. "It started at 2.2 percent in January, climbed to 4.4 percent in May, then fell to 3.5 percent in June. Fortunately, our model is designed not to overreact to these swings, keeping our COLA projections relatively steady."
...
A Smaller Raise Could Still Be Good News
For beneficiaries, a lower COLA may initially sound like bad news because it means a smaller increase in monthly Social Security payments. However, because the adjustment is tied to inflation, a declining forecast can also signal that prices are rising more slowly.
"If the CPI-W continues on the same downward path, however, the COLA could end up a lot lower still. This means the bigger increase people have been expecting may not materialize. That's not such a bad thing if it means the cost-of-living crisis is finally being tamed," Puckrin said.
Social Security benefits are adjusted each year to help more than 75 million beneficiaries preserve their purchasing power as living costs rise. The adjustment expected for 2027 is larger than this year's because inflation has generally been running higher in 2026 than during the period used to determine the 2026 increase.
Even so, a bigger COLA does not necessarily leave recipients financially better off if the increase is being driven by higher prices.
"The CPI and the COLA are locked in the same dance, meaning the COLA will rise if the cost of living continues rising. As such, the higher benefits would be an illusion—the ballooning costs of goods and services would swallow the increase, and Medicare will claw back a big chunk of it before it even reaches your bank account, with Part B premium set to rise again next year," Puckrin said.
Deon Strickland, a financial advisor and an in-house economist at Scholar Advising, said beneficiaries should not expect an especially dramatic swing in the adjustment.
"As for how this affects elderly Americans who depend on Social Security, I don't think the numbers are going to move a lot," he told Newsweek. "The cost of living adjustment they saw last year is likely to be within a tenth of what they see this year. Look at the 10-year rate, it's traded within a very narrow band for three years now. So I don't think Social Security recipients should be worried about either a sharp increase or a sharp decrease in their COLA."
Retirees Still Feeling Higher Costs
Even when inflation slows, beneficiaries can remain under pressure because prices that have increased do not necessarily fall to previous levels.
According to Benton, the inflation rate does not always capture how older Americans experience rising living costs.
"Seniors don't experience inflation as a percentage on a chart. They experience it at the grocery store, at the pharmacy, in their insurance premiums and when they pay the rent. That's why the size of the COLA matters, but so does how accurately it reflects their real-world expenses."
A 2025 TSCL survey of 1,359 Americans age 65 and older found that 19.4 percent of retirees considered themselves financially healthy, while 52.4 percent said they were financially vulnerable and 28.2 percent said their income did not cover essential expenses. Separately, a September 2025 AARP survey of 1,001 U.S. adults found that 77 percent of Americans age 50 and older said a Social Security COLA of about 3 percent would not be enough to keep pace with rising prices, while 72 percent said an increase of at least 5 percent was needed.
Benton added: "Frankly, it's infuriating that seniors must wait for a COLA to catch up with prices that have already driven up their grocery bills, housing costs, health care expenses and insurance premiums. A higher COLA is welcome, but seniors shouldn't have to lose purchasing power year after year before Washington acknowledges what they're experiencing."
Despite the latest downgrade, a COLA of between 3.5 and 3.6 percent would still be the largest annual Social Security adjustment since 2023. Over the past decade, COLAs have averaged 3.1 percent, with high inflation caused by the coronavirus pandemic producing increases of 5.9 percent in 2022 and 8.7 percent in 2023.
What Happens Next
The August and September CPI-W figures combined with July's reading will determine where the 2027 increase lands. The SSA traditionally announces the official COLA in October, as soon as all three third-quarter inflation figures are available.
Until then, forecasts could continue to change. For beneficiaries, however, a lower projected increase would not necessarily mean their financial position is worsening—particularly if it comes alongside slower growth in the everyday costs the COLA is intended to offset.
Contact Newsweek editors on this story: Ben Kelly and Shakeema Edwards.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines