The three-month window of inflation data that will determine next January’s Social Security cost-of-living adjustment (COLA) has just begun.
The two most closely watched early forecasts already differ by nearly a full percentage point, underscoring how unusually volatile this year’s estimates have become.
Understanding the Importance of COLA in Social Security Adjustments
The Senior Citizens League currently projects a 3.8% COLA increase for 2027, while independent policy analyst Mary Johnson forecasts 4.7%, according to CNBC.
Both figures represent a marked jump from January’s 2.8% adjustment, which added roughly $56 to the average monthly benefit.
What makes this year notable is not just the size of the gap between the two estimates, but how quickly both have moved. Johnson’s own forecast has climbed steadily from just 1.2% in January to 1.7%, then 3.2%, then 4.2%, and now 4.7% by her most recent update.
This increase tracks a sharp run-up in energy prices. Much of that volatility has coincided with the recent conflict between the US and Iran, which disrupted oil shipping through the Strait of Hormuz.
This disruption pushed gasoline and energy costs sharply higher this spring; the Consumer Price Index for Urban Wage Earners and Clerical Workers has seen fuel oil prices rise 64.1% and petrol 40.7% over the past year.
In dollar terms, a 3.8% adjustment would add about $79 to the average retired worker’s monthly benefit, lifting it from $2,081.16 to roughly $2,160, based on Social Security Administration figures for April.
Johnson’s 4.7% figure would deliver a considerably larger increase. If it holds, it would rank as the fourth-biggest COLA since 2000, behind only the 5.8% rise in 2009, the 5.9% increase in 2022, and 2023’s 8.7% adjustment.
Both of the latter were tied to pandemic-era inflation.
Yet a larger headline number does not necessarily translate into better finances for retirees.
Because the COLA is designed only to offset price increases that have already occurred, it helps beneficiaries keep pace with inflation rather than get ahead of it.
Johnson has estimated that this year’s 2.8% raise, which added about $56 to the average check, would actually have needed to be closer to $94 to fully match the pace of rising living costs.
It doesn’t necessarily improve their financial situation. It’s more of an offset, especially when you consider that health care and housing costs are rising faster than the COLA itself.
Stephanie Ford, senior vice president at Wealth Enhancement Group, told CNBC Select this insight.
The shortfall reflects a longer-running erosion in the value of Social Security benefits.
The Senior Citizens League estimates that benefits have lost 13.7% of their purchasing power since 2016.
They would need to rise by 15.7% — or roughly $295.85 a month for the average beneficiary — simply to restore what has already been lost.
Shannon Benton, the League’s executive director, has noted that more than half of seniors already cannot afford basic living costs such as food, shelter, and transportation.
This concern ties back to the original purpose of the program when it was signed into law 91 years ago.
Rising Medicare costs threaten to eat further into whatever increase retirees do receive.
Part B premiums are deducted directly from Social Security payments before they arrive.
The 2026 Medicare Trustees Report, released on 9 June, projected a standard 2027 Part B premium of about $209.50 a month, up roughly $6.60 from this year’s $202.90.
That follows a particularly painful mismatch in 2026, when the standard premium jumped 9.7% even as the COLA rose by only 2.8%.
Martha Shedden, president of the National Association of Registered Social Security Analysts, has told U.S. News that the underlying inflation measure used for the COLA does not fully capture this problem.
Older Americans spend a disproportionately large share of their income on healthcare and prescriptions compared with the younger, working population the index is designed to track.
The final number will not be confirmed until the Social Security Administration’s usual mid-October announcement.
This announcement will occur once July, August, and September inflation data have all been recorded, and the final figure could yet land outside the current 3.8%–4.7% range in either direction.
In the meantime, Ford has recommended that retirees who rely heavily on Social Security look into supplemental sources of income.
This is important rather than counting on the COLA alone to cover rising costs.
This advice carries particular weight given how many older Americans have little else to fall back on: according to the Senior Citizens League’s 2026 survey, nearly 44% of retirees — around 24.8 million people — now draw all of their income from Social Security, up from 39% just the year before.
