Social Security benefits will see a decent boost after a cost-of-living adjustment hits checks in 2027. That COLA spike could be in a range of 3.5% to 3.6%, based on the latest estimates.
One more month of inflation data – September – must be known before a precise figure for the 2027 cost-of-living adjustment for Social Security benefits can be calculated and released.
The next round of consumer price index data for September will be disclosed by the U.S. Bureau of Labor Statistics on Oct. 14 – and that's the day Social Security beneficiaries will learn the COLA figure for 2027.
Right now, it's very likely that the inflation-related boost for Social Security benefits next year will be much higher than it was this year when benefits rose by 2.8%.
Sadly, seniors are glued to COLA forecasts now that inflation has stubbornly stuck around for more than five years. Gas, groceries, utilities, many prescription drugs and more hit price levels that are way too high for many people but especially for older adults and others on limited, fixed incomes.
"Affluent households can absorb higher prices; lower- and middle-income households have far less room to adjust," wrote Diane Swonk, chief economist KPMG US, in a report issued Sept. 10.
Mary Johnson, an independent Social Security and Medicare policy analyst, released a forecast on Friday, Sept. 11, that predicted a 3.5% hike for the Social Security cost-of-living adjustment in 2027.
If so, the COLA hike in 2027 would be the highest cost-of-living adjustment made in three years when the inflation adjustment was 3.2% for 2024.
"The rate of inflation is pointing higher for next month’s final data, but will it be high enough to push the COLA higher than 3.5%?" she asked.
"A lot depends on highly volatile oil prices, which are beyond my ability to forecast, so I leave this to others, or the betting markets to sort out for us,” Johnson added.
The new estimates for the Social Security cost-of-living adjustment in 2027 reflect the inflation trend for July and August. But September's data will be key in the final calculation.
How hot was inflation in August?
On Friday, Sept. 11, the U.S. Bureau of Labor Statistics announced that the Consumer Price Index for All Urban Consumers rose 3.4% in August over the last 12 months. That's the same as the 3.4% jump in July.
The CPI increased 0.4% month-over-month in August after rising 0.1% in July.
According to the Bureau of Labor Statistics, the index for shelter rose 0.3% in August after rising 0.1% in July. The index for food increased 0.1% over the month, as the index for food away from home increased 0.3%.
The index for gasoline rose 3.9% in August, accounting for over one third of the monthly all items increase. The index for energy increased 2.1% over the month.
Consumers saw higher prices in August month-over-month for categories such as communication, lodging away from home, airline fares, education, and used cars and trucks.
Categories with significant declines month-over-month included the index for medical care and the index for motor vehicle insurance.
Consumers saw incredible sticker shock over the past year for fuel oil, which went up 52% year over year. Gasoline rose 27.4% in the past year, according to the latest CPI data for August.
Will prices keep going up?
Going forward, inflation could end up rising faster in the months ahead than most economists believe, according to Michael Greiner, associate professor of management at the Oakland University School of Business Administration.
Greiner projects that inflation will remain over the 3% level, perhaps approaching 4%, for the next year, which would be more consistent with what traders in the bond market seem to be anticipating.
The cost-of-living adjustment for Social Security in 2027 could be around 3.6%, he said, if current trends continue. And while strong, many seniors will say the increase in Social Security benefits isn't enough to cover their higher expenses.
"I do think this level is likely too low," Greiner said.
Many seniors and others receiving Social Security benefits see a larger percentage of their budget going to basics, including food and energy, than average consumers, Greiner said.
Analyst Johnson noted that the Medicare Trustees estimated earlier in 2026 that the monthly base Medicare Part B premium for 2027 would increase $6.60 a month. If so, the premium would grow from $202.90 per month to $209.50. The Part B premium is automatically deducted from the Social Security benefits of most Medicare recipients.
Matt Colyar, an economist at Moody's Analytics, said it appears unlikely that Social Security recipients will see a 3.8% cost-of-living adjustment in 2027 or higher, even with expectations that inflation could heat up in September.
He noted that it's difficult to make any forecast with a high degree of confidence given all the uncertainties, including the Iran War. "Much whipsawing is occurring month to month based off of energy markets," he said.
Social Security recipients might expect at best a cost-of-living adjustment in a range of 3.6% or 3.7% on the high end, he said. But it could be more likely, Colyar added, to land at a lower range of 3.4% to 3.5%.
Like inflation, COLA estimates fluctuated a bit this summer.
In June, the Senior Citizens League projected that Social Security’s 2027 cost-of-living adjustment could be 3.8% in 2027.
By August, though, analysts said it was possible that Social Security benefits could see hike for the cost-of-living adjustment that might range from 3.4% to 3.6% in 2027.
The annual cost-of-living adjustment for Social Security benefits is based on how inflation is running in the third quarter. Each year, the formula reflects monthly changes for July, August and September for the Consumer Price Index for Urban Wage Earners and Clerical Workers.
This year's third-quarter inflation numbers will be compared with last year's third quarter to get to the upcoming COLA figure for Social Security benefits.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.
This article originally appeared on Detroit Free Press: How much will Social Security checks go up? New CPI report gives clues
