WASHINGTON, Aug. 13 (Senior Newspaper) — Preliminary estimates for the 2027 Social Security cost-of-living adjustment range from 3.2% to 3.6% after new inflation data showed prices rising more slowly in July than in June.
The competing forecasts matter to Social Security beneficiaries and retired workers planning their household budgets. But none is final. The official adjustment will depend on inflation readings for August and September, which have not yet been included.
What are the current estimates?
The Committee for a Responsible Federal Budget, a nonpartisan policy organization, projects a 3.2% increase. The group said the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, was flat in July and up 3.4% from a year earlier.
AARP estimates a 3.5% increase. The organization described the figure as its first forecast issued before all third-quarter inflation data were available.
The Senior Citizens League estimates a 3.6% increase, down from its earlier projection of 3.8%. Independent Social Security and Medicare policy analyst Mary Johnson put her estimate at 3.4%, down from 3.7% in July and 4.7% in June.
The range reflects uncertainty about how inflation will move during the remaining months used in the calculation. Rich Johnson, AARP’s vice president for financial security, said food and energy prices could affect the estimate before the process is complete.
“This is not set in stone,” Rich Johnson said.
Why does July inflation matter?
The Bureau of Labor Statistics reported that CPI-W rose 3.4% over the 12 months through July, compared with a 3.5% increase through June.
CPI-W is the inflation measure used in the annual Social Security adjustment. The Social Security Administration uses the CPI-W readings for July, August and September to calculate the next COLA, or cost-of-living adjustment.
Because only July’s reading is available in the current estimates, a sharp increase or decrease in inflation during August or September could move the final number higher or lower than the forecasts now being cited.
Shannon Benton, executive director of the Senior Citizens League, pointed to the swings in inflation this year as a reason for caution. She said inflation began the year at 2.2%, rose to 4.4% by May and then fell to 3.5% in June.
“One of the wildcards in this year’s forecast has been inflation’s volatility,” Benton said.
How much could benefits change?
The Senior Citizens League calculated that a 3.6% increase would raise an average monthly benefit by $69.75, from $1,937.53 to $2,007.28, if that estimate became the official adjustment.
The dollar effect would vary by beneficiary because Social Security payments differ. A higher COLA would increase monthly payments, while a lower adjustment would provide less additional income as beneficiaries face costs for food, energy, housing and health care.
Mary Johnson said the moderation in inflation led her to reduce her estimate from higher projections earlier in the year.
When will the official COLA be announced?
The Social Security Administration is expected to announce the 2027 COLA on Oct. 14, after the September inflation data are released. Payments reflecting the adjustment are expected to begin in January 2027.
Until then, the estimates from CRFB, AARP, the Senior Citizens League and Johnson are forecasts rather than changes to current benefits. The final adjustment will be set through the federal Social Security calculation using the completed July-through-September CPI-W data.
