Social Security benefits are generally adjusted each year to account for inflation.
In 2022 and 2023, recipients saw significant Cost of Living Adjustments (COLAs) of 5.9% and 8.7% respectively. However, as inflation began to slow down, the adjustments followed suit.
The COLA for 2026 is set at 2.8%, translating to an average increase of about $56 per month for retirees, though higher Medicare premiums are likely to offset these gains for some.
Recent government inflation reports in January hint that the COLA for 2027 could drop even further if inflation trends don’t shift significantly in the upcoming months.
Estimated range is 1.2% to 3.1%
Mary Johnson, an independent analyst focused on Social Security and Medicare, believes that the adjustment could be as low as 1.2% for 2027. If true, this would mark the smallest COLA since the meager 0.3% raise in 2017.
Meanwhile, the nonpartisan Seniors Federation projects a COLA of 2.8% for 2027, mirroring this year’s increase.
Conversely, the Congressional Budget Office anticipates the adjustment to be around 3.1% next year, dropping to 2.5% in the following year.
Declining COLA will ‘exacerbate’ economic stress
The Seniors Alliance expressed concerns that if the COLA settles at 2.8%, it could worsen financial difficulties for older adults. A poll indicated that over half of seniors—around 58%—have avoided healthcare products or services in the last year due to costs.
Another survey conducted by AARP suggested that even a 3% increase would be “insufficient.” When asked about their thoughts on this projection, 77% of the 1,000 respondents aged 50 and older deemed it inadequate, with the majority advocating for a rise of 5% or more.
It’s worth noting that these COLA estimates are preliminary and could change as new data emerges.
The Calculation of the Social Security Cost of Living Adjustment is based on the third-quarter Consumer Price Index for Urban Wage and Office Workers (CPI-W). The percentage change from one year to the next, using the data from the third quarter, determines the adjustment.
Recent CPI figures for January show a 2.2% increase over the past year.
