A bigger raise may be coming, but not for a while

The Senior Citizens League said on August 12 that its latest projection puts the 2027 Social Security cost of living adjustment at 3.6 percent, up 0.8 percentage points from the 2.8 percent increase that took effect this year. If that figure holds, the average monthly benefit of $1,937.53 would rise by $69.75, to $2,007.28. The Senior Citizens League is an advocacy organization that runs its own inflation model, not the government agency that sets the actual number. The official 2027 COLA will be announced by the Social Security Administration on October 14.

The projection landed the same day the Bureau of Labor Statistics released the July 2026 Consumer Price Index for Urban Wage Earners and Clerical Workers, the CPI-W, which showed prices up 3.4 percent over the prior 12 months. The Senior Citizens League said its 3.6 percent estimate sits 0.2 percentage points above that current 12-month reading, meaning its model expects a small further rise before the measurement period closes.

Why the number keeps moving

Shannon Benton, Executive Director of The Senior Citizens League, said inflation has been unusually erratic this year. "One of the biggest wild cards in this year's forecast has been inflation's volatility. It started the year at 2.2%, then surged to 4.4% by May before falling back to 3.5% in June. That kind of instability can throw off forecasts, but our model is designed to avoid chasing every spike and dip, which has kept our predictions on a relatively steady course," she said.

The Senior Citizens League's forecast has swung widely this year. It stood at 2.8 percent in April, jumped to 3.9 percent in May, held at 3.8 percent through June and July, and has now settled at 3.6 percent. The organization's model draws on the Consumer Price Index, the Federal Reserve's interest rate, and the national unemployment rate, and it released an updated version in January 2025 that processes data by federal fiscal year. Oil prices, which the group treats as an important input, sat roughly 24 percent higher on August 6 than a year earlier.

How the actual COLA gets calculated

The Social Security Act, not any private forecaster, decides the real number. The formula compares the average CPI-W for July, August and September of the current year against the same three months from the last year a COLA took effect, then rounds the percentage change to the nearest tenth of one percent. Earlier months in the year, including everything reported so far in 2026, play no role in the official math. Only the third-quarter average matters.

The 2026 COLA of 2.8 percent came from comparing a third-quarter 2025 CPI-W average of 317.265 against a third-quarter 2024 average of 308.729, a difference worked out to 2.8 percent after rounding. That adjustment applied to Social Security benefits paid starting with December 2025, which beneficiaries received in January 2026, and to Supplemental Security Income payments starting that same January. Roughly 75 million Americans, nearly 71 million Social Security beneficiaries and nearly 7.5 million SSI recipients, saw their payments rise by that amount.

The lag built into the system

Because only July, August and September figures count, and because the Social Security Administration does not announce the result until mid-October, there is a stretch of months every year when prices are already moving before any adjustment shows up in a check. The 2027 COLA depends on data not yet published for August and September of this year, even though the July reading of 3.4 percent is already known.

Benton framed the wait in blunt terms. "Frankly, it's infuriating that seniors must wait for a COLA to catch up with prices that have already driven up their grocery bills, housing costs, healthcare expenses and insurance premiums. A higher COLA is welcome, but seniors shouldn't have to lose purchasing power year after year before Washington acknowledges what they're experiencing," she said.

She put the everyday stakes even more plainly in the same release. "Seniors don't experience inflation as a percentage on a chart. They experience it at the grocery store, at the pharmacy, in their insurance premiums and when they pay the rent. That's why the size of the COLA matters, but so does how accurately it reflects their real-world expenses," Benton said.

Why the index itself may undercount a retiree's costs

The CPI-W measures spending by households where more than half of income comes from clerical or wage work and where at least one earner worked 37 weeks or more in the prior year. That group covers about 30 percent of the country. It does not include the spending patterns of people who are retired.

The gap shows up in the weights each index assigns to categories. In the Bureau of Labor Statistics relative importance tables for December 2025, the CPI-W gives housing a weight of 42.658 and medical care 7.596. The research index built around older households, the R-CPI-E, weights the same categories at 49.142 for housing and 11.179 for medical care. Transportation, food and beverages carry more weight in the CPI-W than in the CPI-E, meaning the standard formula leans on categories that matter less to most retirees and underweights the two that matter most, housing and medical care.

The Bureau of Labor Statistics does publish that alternative, the Consumer Price Index for Americans 62 years of age and older, known as the R-CPI-E, as a research series. The bureau states plainly that it has limitations: the underlying survey sample was not designed to represent people 62 and older, the sample of such households is about one-fifth the size of the broader urban sample used for the official index, and the specific stores and items priced were chosen for the general population, not for older households. The bureau also says senior discounts are reflected only in proportion to how the whole urban population uses them, which likely understates how often older shoppers actually use those discounts. The index has not been adopted for official use.

Over the last ten COLA cycles, those covering 2017 through 2026, the CPI-E would have produced a higher figure than the CPI-W in seven of them, averaging 3.29 percent against 3.11 percent for the official measure. In 2024, the CPI-W increase was 3.2 percent versus 4.0 percent under the CPI-E; in 2026 it was 2.8 percent versus 3.0 percent. The organization calculates that switching to the CPI-E alone would have added about $5,000 in benefits for someone who retired in 1999, and more than $12,000 over a 25-year retirement for someone retiring in 2024, if the inflation pattern of the last 25 years continued. Legislation known as the Social Security 2100 Act, introduced in both chambers this year and referred to committee, would not simply replace one index with the other. It would set each COLA using whichever of the CPI-W and the CPI-E yields the higher figure, and that provision would expire after 2036.

What actually moved in July

The headline 3.4 percent figure hides sharp differences by category. Energy fell 1.5 percent for the month but was up 14.7 percent over the year, driven by gasoline prices up 24.6 percent annually even after a monthly dip. Food at home fell 0.1 percent in July but rose 2.7 percent over 12 months, with fruits and vegetables up 5.1 percent for the year even as meat, poultry, fish and eggs fell 0.7 percent for the month. Medical care rose 0.4 percent in July, with hospital services up 0.5 percent and physicians' services up 0.2 percent, while prescription drugs fell 0.8 percent that month. Shelter rose 0.1 percent in July and 3.2 percent over the year. Motor vehicle insurance actually declined 0.3 percent in July after a 2.0 percent drop in June.

What it adds up to over time

The Senior Citizens League contrasts the roughly 1.4 percent average annual CPI-W increase from 2010 through 2019 with the roughly 3.7 percent average from 2020 through 2025. The organization's own Loss of Buying Power report estimates the average Social Security payment lost about 13.7 percent of its value between 2016 and 2026. The 2026 taxable maximum for Social Security payroll taxes is $184,500, the earnings limit for people younger than full retirement age is $24,480, and the limit for those reaching full retirement age this year is $65,160. Whatever the 2027 COLA turns out to be, notices will go out to most beneficiaries online through the my Social Security Message Center in late November, after the October 14 announcement makes it official. The next monthly inflation report, covering August, is due September 11.

Quotes and Sources

Shannon Benton: "Seniors don't experience inflation as a percentage on a chart. They experience it at the grocery store, at the pharmacy, in their insurance premiums and when they pay the rent. That's why the size of the COLA matters, but so does how accurately it reflects their real-world expenses."

Shannon Benton: "One of the biggest wild cards in this year's forecast has been inflation's volatility. It started the year at 2.2%, then surged to 4.4% by May before falling back to 3.5% in June. That kind of instability can throw off forecasts, but our model is designed to avoid chasing every spike and dip, which has kept our predictions on a relatively steady course."

Shannon Benton: "Frankly, it's infuriating that seniors must wait for a COLA to catch up with prices that have already driven up their grocery bills, housing costs, healthcare expenses and insurance premiums. A higher COLA is welcome, but seniors shouldn't have to lose purchasing power year after year before Washington acknowledges what they're experiencing."

References

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