A retiree collecting the average Social Security benefit of roughly $1,976 a month gained about $55 from the 2026 cost-of-living adjustment. If the latest projection holds, next year’s raise could land in nearly the same place, and advocacy groups say that is a problem.
The Senior Citizens League (TSCL), a nonpartisan organization that tracks benefit calculations closely, published a 2.8% COLA estimate for 2027 in its spring 2026 tracking update, based on recent Consumer Price Index trends. That would match the 2026 adjustment exactly. Shannon Benton, TSCL’s executive director, said in the group’s release that “a 2.8% COLA for the second straight year would continue to erode the buying power of Social Security benefits, especially for the oldest retirees who spend the most on healthcare.”
The number is not official. The Social Security Administration will announce the 2027 COLA in October 2026, after the Bureau of Labor Statistics publishes third-quarter CPI-W data and the statutory formula is applied. But if the estimate proves accurate, it would extend a stretch of modest adjustments that followed the unusually large 8.7% COLA in 2023, the 3.2% bump in 2024, and the 2.5% increase in 2025.
What the 2026 COLA already locked in
The 2026 COLA of 2.8% took effect in January 2026 benefit payments. It was calculated from the percentage change in the CPI-W between the third quarter of 2024 and the third quarter of 2025.
For someone at the average benefit level, the increase works out to roughly $55 per month before taxes and Medicare premium deductions. Applied to the post-COLA average, a second 2.8% adjustment in 2027 would translate to a similar dollar amount, roughly $50 to $60 a month depending on the individual benefit. But the standard Medicare Part B premium also rose for 2026, climbing to $185 from $174.70 the year before. That $10.30 monthly increase ate into nearly a fifth of the COLA gain before retirees spent a dollar on groceries or rent. Taxable-earnings caps, the retirement earnings test, and Supplemental Security Income thresholds all shifted in step with the same CPI-W reading, meaning one inflation snapshot shaped a wide range of program parameters.
Why TSCL says 2.8% falls short
TSCL’s argument is structural, not just about one year’s number. The CPI-W tracks spending patterns of urban wage earners and clerical workers, a population that skews younger and healthier than the typical Social Security beneficiary. Retirees over 65 tend to devote a significantly larger share of their budgets to medical care, long-term care, and prescription drugs, while spending less on transportation and apparel.
The Bureau of Labor Statistics publishes an experimental index called the CPI-E, designed to reflect spending habits of Americans 62 and older. As the BLS notes, the index “is not proposed as an official series” and carries methodological limitations, including smaller sample sizes for older households. Historically, the CPI-E has risen slightly faster than the CPI-W in most years, largely because of the heavier weight it assigns to medical costs. Legislation to adopt the CPI-E for COLA calculations has been introduced in multiple sessions of Congress but has never reached a floor vote in either chamber.
The mismatch plays out in retirees’ bank accounts every January. When Medicare Part B premiums, supplemental insurance costs, and out-of-pocket drug spending climb faster than the COLA, some beneficiaries see little or no net gain in their monthly deposit. Advocates call this pattern “the COLA squeeze,” and back-to-back 2.8% adjustments would keep it firmly in place.
What could push the 2027 number higher or lower
TSCL’s projection assumes that inflation trends tracked by the BLS through early 2026 continue at a similar pace into the fall. Several forces could shift the final figure:
- Energy prices. A spike in oil or natural gas costs before September 2026 would lift the CPI-W, since energy carries meaningful weight in the index.
- Shelter costs. Rent and owners’ equivalent rent are the largest single components of the CPI-W. If housing inflation reaccelerates, the COLA could exceed 2.8%.
- Trade policy. New or expanded tariffs on imported goods could raise consumer prices across multiple categories, nudging inflation upward.
- Economic slowdown. A recession or sharp pullback in consumer demand would likely slow price growth and could produce a COLA below 2.8%. In an extreme scenario, the adjustment could be zero, as happened in 2010, 2011, and 2016.
Monthly CPI reports from the BLS, published around the middle of each month, offer the earliest public signal of where the COLA is heading. The July, August, and September 2026 releases will cover the decisive third-quarter window that determines the final number.
More retirees, tighter margins
Each annual COLA carries more weight because the population drawing benefits keeps growing. The 2020 census confirmed that the 65-and-older population expanded faster than any other age group over the prior decade, driven by baby boomers crossing into retirement. According to the SSA’s Monthly Statistical Snapshot, more than 67 million people receive some form of Social Security benefit each month.
The program’s financial outlook adds tension to any proposal that would increase benefits. The 2024 Social Security Trustees Report projected that the combined Old-Age and Survivors Insurance and Disability Insurance trust funds could be depleted by 2035 if Congress takes no action. After depletion, incoming payroll tax revenue would cover only about 83% of scheduled benefits. Switching to a more generous inflation index like the CPI-E would accelerate that timeline, forcing lawmakers to weigh immediate relief for current retirees against the program’s long-range solvency.
How retirees can prepare before October
For anyone budgeting around Social Security income, the practical picture is clear. The 2026 COLA of 2.8% is final and already reflected in monthly checks. The 2027 adjustment will not be confirmed until October 2026. Treating the TSCL estimate as a planning assumption rather than a guarantee is the safest approach.
Financial advisors who work with retirees often recommend building a cushion into annual budgets to absorb the gap between a COLA increase and actual cost increases in healthcare and housing. Reviewing Medicare plan options during open enrollment each fall, comparing Medigap and Medicare Advantage costs, and checking eligibility for programs like the Medicare Savings Program or Extra Help for prescription drugs can offset some of the pressure a modest COLA leaves behind.
The policy debate over whether the CPI-W formula shortchanges older Americans will not be settled by any single COLA announcement. But two consecutive adjustments at 2.8%, arriving while medical bills and housing costs continue to climb, will keep the pressure on Congress to revisit how inflation is measured for the people who depend on Social Security the most.
