The three-month period that will determine the 2027 Social Security cost-of-living adjustment began this week, with unusually high stakes surrounding next year’s benefit increase.Two widely followed forecasters have published early projections for next year’s cost-of-living adjustment, and their estimates sit nearly a full percentage point apart, CNBC reported.For about 75 million Americans collecting Social Security or Supplemental Security Income, the outcome will determine household budgets beginning in January 2027. A closer look at the forces behind a larger raise, however, reveals a paradox that most beneficiaries would rather not face this summer.What the July-September inflation window means for Social Security benefitsSocial Security’s annual raise is tied to one inflation gauge, the Consumer Price Index for Urban Wage Earners and Clerical Workers, commonly called the CPI-W. The Social Security Administration averages that index across July, August, and September, then compares the result to the same three months from the prior year, CNBC reported.The percentage change between those two quarters, rounded to the nearest tenth, becomes the Cost-of-Living Adjustment (COLA) that takes effect the following January. That means the inflation readings released between now and mid-October will carry far more weight than anything published earlier in 2026.Heading into the measurement period, the CPI-W had already climbed 4.4% year over year as of May, the fastest pace since April 2023, according to Bureau of Labor Statistics data.Gasoline prices tracked by the index jumped 40.7% compared with a year earlier, while fuel oil rose 58.9% over the same period, BLS figures showed.Where the two leading 2027 COLA forecasts currently standMary Johnson, an independent Social Security and Medicare policy analyst, raised her 2027 projection to 4.7% after reviewing the May inflation data, up from 4.2% a month prior, CNBC reported. The Senior Citizens League, a nonpartisan advocacy group, projects a more conservative 3.8% increase, down slightly from its 3.9% forecast in May. More Social Security:Fidelity offers a lifeline to millions before Social Security shiftsSocial Security retirees could pocket a bigger 2027 raiseSocial Security’s funds will run out sooner than expectedEither projection would represent a notable jump from the 2.8% adjustment in January 2026, which added roughly $56 to the average monthly check.A 3.8% COLA would add about $79 per month, lifting the typical retired worker’s benefit from $2,081.16 to roughly $2,160, based on the April 2026 average retired worker benefit reported by the Social Security Administration.Johnson’s 4.7% figure would deliver an even larger monthly increase, potentially giving retirees one of their most substantial raises in more than two decades.
Social Security beneficiaries could receive a larger 2027 COLA, with forecasts ranging from 3.8% to 4.7%, boosting monthly retirement benefits.Pekic/Getty Images
Why a bigger Social Security raise may not improve retirees’ financesA higher COLA does not put retirees ahead financially because the raise only reflects prices that have already risen. The adjustment helps beneficiaries keep pace with inflation rather than outpace it, so every additional dollar gained corresponds to a dollar already lost at the grocery store or the gas pump.This year’s 2.8% raise added about $56 to the average monthly check, but retirees would have needed a $94 increase to match the actual pace of rising living costs, Johnson estimated, according to CNBC. Stephanie Ford, senior vice president at Wealth Enhancement Group, told CNBC Select that the COLA does not fundamentally improve retirees’ financial situations.It doesn’t necessarily improve their financial situation. It’s more of an offset, especially when you consider that health care and housing costs are rising faster than the COLA itself.That $38 monthly shortfall illustrates how even a seemingly adequate adjustment can leave beneficiaries struggling to cover essential expenses.Shannon Benton, executive director of the Senior Citizens League, reinforced the concern in a June statement, noting that more than half of seniors already cannot afford basic living costs for food, shelter, and transportation.Rising Medicare premiums could absorb part of the 2027 benefit increaseHealth care costs threaten to erode whatever raise beneficiaries receive next January because Medicare Part B premiums are deducted directly from Social Security checks. The 2026 Medicare Trustees Report, released June 9, projected a standard 2027 Part B premium of about $209.50 per month, a roughly $6.60 increase from the current $202.90 rate.In 2026, the standard Medicare Part B premium rose 9.7% to $202.90 from $185.00, while the COLA increased by only 2.8%. That gap has left many beneficiaries feeling shortchanged.Martha Shedden, president of the National Association of Registered Social Security Analysts, told U.S. News that older Americans spend a disproportionate share of their budgets on health care and prescriptions compared with the workers the CPI-W is designed to track.What retirees can expect between now and the October COLA announcementThe final number could land anywhere between the Senior Citizens League’s 3.8% and Johnson’s 4.7%, or outside that range entirely, depending on how prices move through September. Retirees who depend heavily on Social Security should explore supplemental income options rather than counting on the raise alone, Ford recommended.Nearly 44% of retirees, roughly 24.8 million older Americans, draw all of their income from Social Security, up from 39% in 2025, the Senior Citizens League’s 2026 survey found. For that population, the final number is the difference between covering monthly expenses and falling further behind.Related: Suze Orman calls out a Social Security claiming risk for retirees