Key facts
- AARP projects a 3.6% Social Security cost-of-living adjustment (COLA) for 2027.
- This projected COLA would increase the average retired worker's benefit by $75 a month.
- The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July, August, and September.
- The Bureau of Labor Statistics reported that the CPI-W rose 3.5% in August compared to one year ago.
- The official 2027 COLA will be announced on October 14, following the release of September inflation data.
- Many older adults rely on Social Security for the majority of their income, making COLA information crucial for financial planning.
The AARP is projecting a 3.6% cost-of-living adjustment (COLA) for Social Security recipients in 2027, a figure that would represent the largest annual increase since 2023. This estimate is based on current inflation data, including the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which rose 3.5% in August compared to the previous year. The COLA is determined by the change in the CPI-W during the third quarter of the year (July, August, and September) compared to the same period in the prior year.
Rich Johnson of the AARP Public Policy Institute highlighted the importance of this forecast for retirees, many of whom depend on Social Security as their primary source of inflation-protected income. He noted that providing reliable information sooner allows beneficiaries to better plan their finances amid rising prices. A survey by the Nationwide Retirement Institute indicated that 74% of current Social Security beneficiaries have already made financial adjustments due to costs outpacing their benefits, with over half cutting discretionary spending and 38% reducing spending on essentials.
Other groups, such as the Senior Citizens League, are forecasting a slightly lower COLA of 3.5%. Shannon Benton, executive director of the Senior Citizens League, expressed that seniors may ultimately be disappointed with the COLA, as the annual adjustment may not fully offset the unique inflationary pressures faced by older Americans, particularly with rising healthcare costs. The official COLA announcement is scheduled for October 14, after the Bureau of Labor Statistics releases its September inflation data.