Social Security Benefits Could Rise in 2027 as Inflation Shapes the Upcoming COLA

We're just a few days away from knowing exactly how much bigger next year's Social Security payments will be compared to this year's. Specifically, on Wednesday, Oct. 14, the Bureau of Labor Statistics will release the third and final inflation report that determines the cost-of-living adjustment -- or COLA -- for the following year's benefits. The Social Security Administration will make its official announcement shortly after that.

But presuming September's consumer price increases look more or less like July's and August's, we've already got a pretty good idea of the increase to expect beginning in 2027.

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What we know and how we know it

The annual Social Security COLA that takes effect in January isn't arbitrary. It's not set by the Social Security Administration either. As noted, it reflects the price increases that the average U.S. consumer has faced over the previous 12 months, as measured by the Bureau of Labor Statistics' Consumer Price Index (CPI) for urban wage earners and clerical workers. You may know it better as the monthly CPI-W.

But not just any CPI-W data. In an effort to make it as timely as possible but also give the Social Security Administration enough time to make the adjustment for the beginning of the year ahead, the annual cost-of-living adjustment is specifically based on the average of the year-over-year percentage changes in the CPI-W for each of the three months that make up the third calendar quarter of any given year.

And we've already got two of those three numbers in hand. July's and August's annualized rates of change in the CPI-W were 3.4% and 3.5%, respectively. Given that most prices haven't come down any since August's, September's consumer inflation rate should be in that same ballpark, putting 2027's COLA somewhere around The Senior Citizens League's projection for a 3.5% cost-of-living adjustment to beneficiaries' current payments. For perspective, that would raise this year's average Social Security payment of $1,997 per month by $70, to roughly $2,067 next year ... a nice little bump compared to 2026's increase of 2.8%.

Close enough to count on

The number's not etched in stone (at least not yet). It's possible September's figure could be dialed back from July's or August's inflation rates, or even come in a little hotter than those numbers.

It's unlikely last month's consumer inflation will look wildly different from what it did during the first two months of the third calendar quarter, though. The Senior Citizens League's prediction of a 2027 Social Security COLA of 3.5% should be pretty much on target, prompting beneficiaries to start making budget adjustments now.

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