Social Security 2027 COLA: How much will benefits go up each month? Probably not enough

The next Social Security cost of living adjustment will be “particularly important” for millions of retirees, financial experts say.

But don’t count on the increase to cover rising prices at the grocery store, doctor’s office and gas station.

AARP’s new COLA forecast has seniors receiving a 3.6% COLA in 2027. That estimate is based on the latest consumer price data from the federal Bureau of Labor Statistics and Federal Reserve projections of inflation trends.

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According to AARP, the average monthly Social Security benefit for a retiree in July was about $2,086, so a 3.6% COLA would boost that by about $75 to roughly $2,161 a month. The average monthly benefit for a surviving spouse ($1,933) would rise by about $70, and Social Security Disability Insurance for the average worker with a disability ($1,635) would increase by about $59 a month.

The amount of the increase will be key for seniors.

The 2027 COLA “will be particularly important,” Tyler Bond, a senior fellow at the National Academy of Social Insurance told AARP, since the cost of living keeps rising and “the near-term economic outlook remains so uncertain.”

In a recent survey by the Nationwide Retirement Institute, 74% of current Social Security beneficiaries said they have made financial changes because costs have risen more than their benefits, AARP reported. More than half said they have cut discretionary spending and 38 percent said they’ve reduced spending on essentials, like groceries and medicine.

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On Sept. 11, the Bureau of Labor Statistics reported, according to AARP, that the inflation gauge used to calculate the Social Security increase – the Consumer Price Index for Urban Wage Earners and Clerical Workers or CPI-W— rose 3.5 percent in August compared to one year ago.

COLA is calculated by determining average yearly change in the CPI-W for July, August, and September.

Social Security payments have been automatically adjusted for inflation annually since 1975. The biggest COLA to date came in 1980, when inflation increased payments by 14.3%. The 2026 COLA, which took effect in January, was 2.8%. It increased the average monthly benefit for a retired worker by about $56, from $2,015 to $2,071, according to Social Security Administration estimates.

The Social Security Administration will announce the official 2027 COLA on Oct. 14.