What Early Estimates Say About Your Social Security COLA Boost in 2027

We don't have the official number just yet; we won't get that until October.

But based on the inflation data we do have through July, we've got a pretty good idea of what 2027's cost-of-living adjustment -- or COLA -- to Social Security's benefits payments will be. Following last week's update to the Bureau of Labor Statistics' measure of consumer inflation, retiree advocacy group The Senior Citizens League now predicts that beginning in January 2027, Social Security payments will grow 3.6% from their current levels. That would push the average retiree's monthly payment up to roughly $2,146.

Here's what you need to know.

Inching toward certainty

If you're reading this and aren't aware, the Social Security Administration raises its beneficiaries' payments every year to offset the impact of inflation. It's not an arbitrary cost-of-living adjustment, though. It's determined by the Bureau of Labor Statistics measure of inflation, although not the one you might be thinking.

The headline figure widely circulated every month is the annualized change in the Consumer Price Index (CPI) for all urban consumers, or CPI-U. Social Security's COLA, however, is based on the average year-over-year change of its Consumer Price Index for urban wage earners and clerical workers, or CPI-W, specifically for the months of July, August, and September. That's why we won't know 2027's cost-of-living adjustment until October of this year, when September's inflation report is finally posted.

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The two different consumer price indexes are usually quite close, though. For perspective, the United States' CPU-I was up 3.4% year over year in July, while the annualized change of the CPI-W for last month was also 3.4%.

Where we are should be pretty close to where we'll be

Obviously, something could change in August and September to lower the three-month average change in the CPI-W, which ultimately determines the following year's cost-of-living adjustment to Social Security's benefits payments. Not much is likely to change, however. Price changes are relatively slow. It's also even possible that price increases could accelerate again, particularly if the conflict with Iran that's preventing the free flow of crude oil through the Strait of Hormuz lingers, or even heats up.

In other words, where things are now and where The Senior Citizens League thinks they'll be by the end of September are probably pretty good estimates of what's in store, and how big the coming year's cost-of-living adjustment to Social Security payments will be.

Just bear in mind that a 3.6% COLA means a 3.6% increase in what individual beneficiaries are currently receiving. Those who are recipients enjoying larger payments now will see a larger dollar adjustment when the time comes, simply because they've got a higher starting point on which their 3.6% increase is based.

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