Social Security beneficiaries will likely receive a modest raise in 2027. The latest estimates project a cost-of-living adjustment (COLA) between 3.7% and 3.8% for that year, down from earlier forecasts that had suggested a larger increase.
The COLA calculation ties directly to inflation trends. As price growth slows from the elevated levels seen in 2022 and 2023, the annual bump beneficiaries receive shrinks accordingly. The Social Security Administration calculates COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, measured from the third quarter of one year to the third quarter of the next.
For context, 2024 brought a 3.2% COLA. The 2027 projection of 3.7% to 3.8% sits higher than this year's adjustment but remains far below the 8.7% increase retirees received in 2023 when inflation peaked.
What this means for your benefits depends on your current payment. Someone receiving $2,000 monthly could see an increase of roughly $74 to $76 per month in 2027. While any raise helps combat rising living costs, cooler inflation also means slower growth in benefit payments overall.
The declining COLA estimate reflects broader economic trends. Inflation has retreated from pandemic highs as the Federal Reserve raised interest rates aggressively. This cooling inflation benefits savers earning higher yields on savings accounts and CDs, but it translates to slower benefit growth for retirees who depend on Social Security as their primary income source.
Workers still contributing to Social Security now should track these projections alongside their retirement planning. Slower COLA growth means planning with slightly lower benefit assumptions may be prudent. Early retirees and those nearing full retirement age should factor this trajectory into their benefit-claiming strategies.