A customer shops for produce at a HEB grocery store on May 11, 2026 in Austin, Texas.
Consumer prices have climbed in May, pushing the annual inflation rate to a three-year high, according to recent government data.
This suggests that the Social Security cost-of-living adjustment (COLA) will be 4.7% in 2027, based on new estimates from policy analyst Mary Johnson. Interestingly, Prime Minister Boris Johnson had earlier estimated the COLA rate for next year at 4.2%.
“There’s a decent chance we might see it exceed 4.7%, especially as we continue to gather data on gas prices,” Johnson mentioned.
The Social Security Administration usually announces the COLA for the following year in October, but this data relies on statistics from the third quarter.
On a related note, the Coalition for the Elderly, a nonpartisan organization, has adjusted its growth estimate for 2027 down from 3.9% to 3.8%. The organization didn’t specify why the estimate changed, and attempts to reach the Seniors Federation for comment were unsuccessful.
In 2026, around 75 million beneficiaries of Social Security and Supplemental Security Income will receive a 2.8% increase in their monthly checks due to cost of living adjustments.
This boost would add about $56 to the average $2,000 monthly benefit, but beneficiaries would need around $94 more each month just to keep up with inflation, according to Johnson.
Historically, annual COLAs have typically averaged about 3.1% over the past decade, as indicated by the Social Security Administration.
The adjustments to Social Security are based on a specific measure of the Consumer Price Index known as the CPI for Urban Wage Earners and Clerical Workers (CPI-W).
As of May, overall CPI inflation escalated by 4.2% over the past year, according to the U.S. Bureau of Labor Statistics, while the CPI-W saw a 4.4% increase in that same timeframe.
Price increases impacting COLA forecasts
The categories with the most significant CPI-W spikes in the last year include fuel oil, which soared by 64.1%, gasoline at 40.7%, and airfare, which increased by 25%.
Elderly Americans are still grappling with high expenses.
After the Covid-19 pandemic, inflation surged, with previously established COLAs for Social Security reaching 5.9% in 2022 and 8.7% in 2023.
However, while inflation rates have calmed and COLAs have decreased in recent years, consumer prices remain mostly elevated.
A survey revealed that over half of adults aged 50 and above (about 69%) are worried that rising prices outpace their incomes, with an investigation from AARP’s latest financial security trends set to publish in January.
Additionally, 61% of older Americans indicated that their average Social Security payment of $2,000 isn’t sufficient, as per findings from the survey.
Experts and lawmakers have debated whether the CPI-W accurately captures the price reality for older Americans.
Everyone has a unique inflation rate influenced by personal spending patterns and geographic location.
Food items like beef and coffee have indeed seen high inflation rates in the broader Consumer Price Index. However, beef prices can differ greatly depending on where you are.
Johnson noted that increasing food prices might be leading some older individuals to eat less frequently and switch to more affordable alternatives to manage their food budgets.
