AARP projects a 3.6 percent Social Security cost-of-living adjustment for 2027

AARP projects a 3.6 percent Social Security cost-of-living adjustment for 2027, based on current inflation data. 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. This makes COLA information an important tool for budgeting.

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 for the coming weeks.

On Sept. 11, 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 August 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.

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.”

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