Social Security COLA Countdown: Here's Why Retirees Could Get Their Biggest Increase in 4 Years

The wait is almost over for roughly 55 million retirees who receive Social Security benefits. In just 17 days, the Social Security Administration (SSA) will announce how much the 2027 cost-of-living adjustment (COLA) will be.

Last year, Social Security beneficiaries received a 2.8% increase. It's a near certainty that the bump for 2027 will be higher. There's a very good chance that retirees could get their biggest increase in four years.

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Where things stand as of now

SSA determines the annual COLA using an inflation metric called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA is calculated as the percentage increase, if any, between the CPI-W for the third quarter of the current year and the previous year.

The CPI-W values for the third quarter of 2025 and two of the three months in the third quarter of 2026 are already known. The U.S. Bureau of Labor Statistics (BLS) will publish its September inflation report on the morning of Oct. 14, 2026. Shortly afterward, SSA will officially announce the 2027 Social Security COLA.

Based on the available data, the consensus is that next year's Social Security COLA will be the biggest increase since the monster 8.7% boost in 2023 following the post-pandemic inflation surge. AARP projects a 2027 COLA of 3.6%. The Senior Citizens League (TSCL), a nonprofit organization that advocates for seniors, estimates a 3.5% increase.

The big unanswered question is how high inflation will be in September. Fuel prices have risen recently, especially for diesel, with the ongoing Iran war and the war between Russia and Ukraine. This could have ripple effects on the prices of other products.

Why the net gain for retirees will be smaller than advertised

A 3.6% Social Security COLA would translate to the average retired worker receiving an extra $75 per month (roughly $900 per year) in 2027. However, the actual net gain for retirees will be smaller.

Medicare Part B premiums are typically deducted from Social Security benefits. These premiums are projected to rise by $6.60 per month to $209.50. Part B deductibles are also expected to increase from $283 to between $292 and $310.

Many retirees are enrolled in Medicare Part D prescription drug plans. The federal subsidies for stand-alone Part D plans are ending next year. The Part D standard deductible could increase by 14% from $615 to $700. The Part D out-of-pocket cap will also rise by $300 to $2,400.

These higher prices underscore a broader concern for retirees. The CPI-W used to calculate Social Security COLAs wasn't designed for older Americans. The inflation metric doesn't place sufficient weight on expenses that affect seniors more than younger individuals, particularly healthcare costs in retirement.

TSCL estimated in its 2026 Loss of Buying Power report that the average Social Security benefit has lost around 13.7% of its buying power over the past 16 years. The Social Security COLA isn't keeping up with the rising cost of living for retirees. TSCL and others have pushed for a change to how the COLA is calculated, using an inflation metric designed to better reflect seniors' expenses. However, those efforts have not been successful thus far.

The countdown is on

It seems unlikely that the September CPI-W will improve from the August figure. The chances that the 2027 Social Security COLA will be well below the current 3.5% and 3.6% estimates are, therefore, low.

On the other hand, the math makes it very difficult for next year's COLA to be significantly higher than these estimates. Retirees shouldn't expect the COLA to be anywhere close to the 5.9% increase received in 2022 or the 8.7% increase in 2023.

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