The Social Security cost-of-living adjustment (COLA) is based on the inflation rate for the third quarter of the prior year. The estimated rates for 2027 are 3.4% to 3.6%. This is substantially higher than the twenty-year average COLA of 2.6%. It also exceeds the 2026 COLA of 2.8%. The official COLA for 2027 will be released by the Social Security Administration on October 14.

The average monthly 2026 Social Security benefit was $2,086. The projected increase would equal approximately $71 for the average recipient.

The Committee for a Responsible Federal Budget estimates the COLA will be 3.4%. The Senior Citizens League, an advocacy group, claims it will rise by 3.5%. AARP recently projected an increase of 3.6%.

Social Security and the COLA are increasingly important for senior adults. In 2025, 39% of senior Americans depended on Social Security as their sole source of income. Furthermore, an estimated 44% will depend on Social Security for financial support in 2026. These estimates are from The Senior Citizens League.

In August, the Consumer Price Index (CPI) increased 0.4%. The CPI year-over-year was 3.4%. Additionally, the Bureau of Labor Statistics calculated core inflation at a rate of 2.4%. This figure represents a lower rate of inflation because it excludes food and energy prices, which have increased during the past 12 months.

Shannon Benton is Executive Director of The Senior Citizens League. Benton noted, "No matter if the COLA announcement comes in slightly higher or slightly lower than our prediction, seniors will probably end up disappointed in the long run. The reality is that older Americans allocate their budgets differently than people in the workforce, so inflation hits them differently."

Editor’s Note: The increased COLA is a welcome benefit for retirees. However, it also has an impact on the Social Security retirement fund. A reduced retirement fund balance could cause Social Security benefits to be cut by 22% in 2032 if Congress does not take action.