Is a Big Social Security Raise Coming in 2027? Here's the New Estimate.

Fleetwood Mac scored a monster hit in 1977 that featured the lyrics, "Don't stop thinking about tomorrow." Fifty years later, many retirees who listened to that song over and over again have no problems thinking about tomorrow -- especially when it's about their Social Security cost-of-living adjustment (COLA).

The Senior Citizens League (TSCL), a nonprofit organization that advocates for issues impacting seniors, makes monthly COLA projections based on preliminary data. The organization's latest estimate is out. Is a big "raise" coming for retirees in 2027?

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What the latest data says about the 2027 COLA

TSCL's model uses monthly Consumer Price Index (CPI) inflation data from the U.S. Bureau of Labor Statistics, along with the Federal Reserve's interest rate and the national unemployment rate. Inflation is significantly below the post-pandemic highs of 2022 and 2023. However, prices in some areas, especially for food and medical care, remain stubbornly high, impacting seniors.

The organization crunched the numbers and now projects a 2027 COLA of 2.8%. That number may sound familiar to many retirees. It's the exact level of the Social Security benefit increase that took effect this year.

TSCL's COLA Watch recently predicted a 2027 COLA of 4%. Why did the estimate fall so much with the latest update? Inflation volatility is exceptionally high, making forecasting next year's COLA more challenging.

Still, a 2.8% COLA would be above the average of 2.6% since 2000. The average benefit check for retired workers would increase from $2,024.77 to $2,081.46, according to TSCL. That bump amounts to an annual "raise" of around $680.

What a 2.8% 2027 COLA means for retirees

Receiving an additional $680 (for the average retiree) would help offset rising costs. But will it be enough? Probably not.

TSCL Executive Director Shannon Benton stated, "Americans are right to worry about our current COLA projection." She added, "The fact is that most senior households already get by on only about 58% as much income as their working-age counterparts, and you'd be hard-pressed to find a middle-class or working-class American who thinks the economy is doing well right now, especially as oil prices rise."

In particular, retirees' healthcare costs are usually well above those of younger Americans. As a case in point, while Social Security benefits increased by 2.8% in 2026, Medicare Part B premiums jumped 9.7%. The higher premiums greatly reduced the COLA that actually reached retirees' bank accounts.

One problem is that the inflation metric used to calculate COLAs doesn't accurately reflect the higher costs seniors face. The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). TSCL has advocated replacing the CPI-W with a metric better suited to the senior population.

The timing of COLAs is another issue. For example, the next Social Security benefit adjustment will be based on the year-over-year CPI-W increase for the third quarter of 2027. The COLA won't take effect, though, until January 2027. As a result, retirees will have already paid higher prices before they receive any extra money.

What to watch

To be sure, the 2027 Social Security COLA is far from final. SSA won't reveal the actual adjustment for next year until mid-October, after the third-quarter CPI-W data has been released. A lot can happen between now and then.

In particular, retirees will want to watch how things unfold in the Middle East. A prolonged blockade of the Strait of Hormuz could push oil prices higher. Higher fuel prices have a ripple impact throughout the economy because transportation is a key component of overall product costs. If inflation rises, the 2027 COLA could exceed TSCL's current estimate of 2.8%.

Also, keep your eyes on congressional bills impacting Social Security. For example, TSCL's latest COLA projection highlighted a new proposal from the Committee for a Responsible Federal Budget that would cap Social Security benefit payments at $50,000 per person ($100,000 per couple).

Retirees will know in six months what the actual 2027 COLA will be. In the meantime, they can heed Fleetwood Mac's advice about don't stop thinking about tomorrow -- because retirement planning doesn't stop after you retire.

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