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Social Security COLA 2027: An Early Look at How Much Payments Could Increase
AARP experts forecast a 3.6% cost-of-living adjustment for benefits next year
Jon Krause
Key takeaways
- AARP projects a 3.6 percent Social Security cost-of-living adjustment for 2027, based on current inflation trends. That would increase the average retired worker’s benefit by $75 a month.
- The COLA is based on changes in consumer prices in the third quarter of the year and will be finalized in October.
- For many retirees, Social Security is the only source of inflation-protected income, making reliable COLA information an important tool for budgeting.
Social Security recipients could see a 3.6 percent cost-of-living adjustment (COLA) in 2027, according to an AARP analysis of current inflation data.
The estimate is based on the latest consumer price data from the federal Bureau of Labor Statistics (BLS) and Federal Reserve projections of inflation trends in the coming months.
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On July 14, the BLS reported that the inflation gauge used to calculate the Social Security COLA — the Consumer Price Index for Urban Wage Earners and Clerical Workers (known as the CPI-W) — rose 3.5 percent in June compared to one year ago.
The COLA is based on how much the CPI-W changes in the third quarter of the year — July, August and September — from the same period the previous year. The 2027 COLA will be announced on Oct. 14, after the BLS releases September inflation data, and it takes effect with the payments beneficiaries receive in January.
This is the first time AARP has announced a COLA forecast ahead of the third-quarter inflation reports.
Rich Johnson, vice president for financial security at the AARP Public Policy Institute, notes that many older adults rely on Social Security for the bulk of their income. He says the AARP COLA forecast is intended to help them map out their 2027 finances.
“Family budgets have been under increasing pressure because of rising prices,” Johnson says. “The sooner that we can give them reliable information as to how much their benefits might [increase next year], the sooner they can start planning.”
What’s driving higher prices
The average monthly Social Security benefit for a retiree in June was about $2,084, so a 3.6 percent COLA would bump that up by $75. The average monthly benefit for a surviving spouse ($1,931) would rise by about $70, and Social Security Disability Insurance for the average worker with a disability ($1,635) would increase by about $59 a month.
The CPI-W is a measure of changes in prices for a selection of goods and services, including food, energy and medical care. It is a subset of the government’s main inflation gauge, the Consumer Price Index for All Urban Consumers (CPI-U), which covers a broader range of consumers. The CPI-U also rose 3.5 percent year-over-year in June, after climbing 4.2 percent year-over-year ending in May — the biggest jump in three years.
The recent growth in consumer prices is largely due to tariffs and the spike in energy prices stemming from the conflict in Iran, effects of which are “rippling through the economy,” says Indivar Dutta-Gupta, a distinguished visiting fellow with the National Academy of Social Insurance.
“Older Americans are feeling inflation most acutely in groceries, energy, housing and health care — areas where those on fixed incomes have little room to adjust to and absorb costs,” he says.
Johnson cautions that inflation trends could change, and the AARP COLA forecast is “our best guess based on expert analysis.” It’s based on the CPI-W data from October 2025 through June 2026 and the Federal Reserve Bank of Cleveland’s inflation projections for July, August and September.
“This is not set in stone,” Johnson says.
COLA through the years
Social Security payments have been automatically adjusted for inflation annually since 1975, under legislation passed by Congress three years earlier with strong support from AARP. The biggest COLA to date came in 1980, when inflation increased payments by 14.3 percent.
The 2026 COLA, which took effect in January, was 2.8 percent. It increased the average monthly benefit for a retired worker by about $56, from $2,015 to $2,071, according to Social Security Administration estimates.
From 2001 through 2025, the COLA averaged about 2.6 percent. If there is no inflation in a given year, there’s no COLA the next year. That was the case in 2010, 2011 and 2016.
Benefit increases can lag behind inflation during periods of price volatility, leaving some Social Security recipients struggling to make ends meet. For example, beneficiaries temporarily lost buying power in 2021, when the 1.3 percent COLA, based on low inflation in 2020, was quickly followed by surging prices during the COVID-19 pandemic.
That pattern repeated in 2022, when Social Security payments increased by 5.9 percent, but inflation reached a 9 percent peak. The following year’s COLA of 8.7 percent helped beneficiaries catch up.
Johnson says the COLA has outsize significance for retirees, for whom Social Security is often the only source of income that’s protected against inflation. “It’s one of the most important features of Social Security,” he says.
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