Social Security COLA Projections Are Slipping: What Retirees Need to Know Now
Key Points
The official 2027 Social Security COLA will be announced on Oct. 14.
The annual COLA is based on inflation data from the third quarter of each year.
Higher energy prices have been a major driver of inflation over the past few years.
- The $23,760 Social Security bonus most retirees completely overlook ›
We're approaching one of Social Security's most anticipated days: the announcement of the annual cost-of-living adjustment (COLA). The official COLA will be announced on Oct. 14, but organizations have been releasing predictions based on inflation and other economic data.
One noteworthy prediction comes from a senior advocacy group, The Senior Citizens League (TSCL). Right now, it's projecting that the 2027 COLA will be 3.5%. Although this would be the largest COLA since 2023, TSCL's COLA projections have been shrinking since May, which could be good or bad news.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
It could be good news because of why they're shrinking, or bad news because it means a smaller boost for Social Security recipients.
Image source: Getty Images.
How the annual COLA is calculated
First, it's worth noting just how the COLA is calculated. It's based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price changes in goods and services paid for by hourly and clerical workers.
Social Security averages CPI-W numbers from the third quarter (July, August, and September), compares that average to the CPI-W average from the previous year, and then sets the upcoming COLA as the percentage increase, rounded up to the nearest tenth of a percentage.
For example, the CPI-W average in 2025 was 2.76% higher than the 2024 average, which is how we arrived at the 2.8% COLA for 2026. The 2024 average was 2.48% higher than the 2023 average, giving us the 2.5% COLA in 2025.
If the CPI-W is the same as or lower than the previous year, there's no COLA for the upcoming year, and benefits remain the same. This has happened only three times before, heading into 2010, 2011, and 2016.
TSCL COLA projections by the month
As different economic factors change, so does TSCL's COLA projection. Here is how they've changed over the year:
- January: 2.5%
- February: 2.8%
- March: 2.8%
- April: 2.8%
- May: 3.9%
- June: 3.8%
- July: 3.8%
- August: 3.6%
- September: 3.5%
The biggest jump was from April to May, mainly due to a spike in energy prices (gas, fuel oil, electricity) amid conflicts in the Middle East. Below is how much energy prices have jumped year over year in every month from May onward:
- May: 23.5%
- June: 15.7%
- July: 14.7%
- August: 16.3%
If you've filled up your gas tank in the past few months, these numbers probably aren't that shocking. September's energy prices are likely to stay high, so I'd be surprised if the COLA was lower than 3.5%. The CPI-W for July and August came in at 3.4% and 3.5%, respectively, so even if September cools a bit, that should realistically be the floor.
Either way, recipients can expect one of the higher COLAs we've seen in the past 30 years.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.
View the "Social Security secrets" »
The Motley Fool has a disclosure policy.
Recommended Articles
