Retirement Social Security

Social Security Update: New COLA Estimate Could Be Bad News for Seniors

Social Security recipients may be in for a world of disappointment next year.

By Maurie Backman , Edited by Laura Hohenstein

Updated May 6, 2026

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Many retirees rely on Social Security for a stress-free retirement. But for those without other sources of income, the program's annual cost-of-living adjustments, or COLAs, are extremely important.

In 2026, Social Security benefits got a 2.8% COLA. Based on March's inflation report, the most recent one available, the Senior Citizens League is projecting that 2027's COLA will also be 2.8%.

A flat Social Security COLA estimate may not seem like bad news, but here's why it actually is.

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How Social Security COLAs are calculated

Social Security COLAs are based on inflation changes during the third quarter of the year, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When there's a year-over-year increase in the CPI-W for July, August, and September, Social Security benefits get a raise. When there's no increase or a decrease, benefits remain flat.

Because those raises are based specifically on third-quarter data, the Social Security Administration typically makes an official COLA announcement in October. As such, any projections that are available right now are just that – projections.

But Social Security estimates can help give seniors a sense of what to expect in the new year. So while the 2.8% projection above is by no means set in stone, it can serve as a "heads-up" of sorts for retirees that next year's Social Security increase may not be all that substantial.

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Why a flat COLA projection is a problem

At first, a 2.8% COLA in 2027 may not seem like a bad thing. After all, it's still a small boost, and it's consistent with this year's increase.

But a 2.8% COLA projection for 2027 is a problem for two reasons. First, it's an indication that inflation isn't cooling, but rather, is still elevated.

Of course, some amount of annual inflation is to be expected and is not necessarily a bad thing for consumers or the U.S. economy. The Federal Reserve itself even says it likes to target a 2% annual inflation rate over the long run.

The problem is that a 2.8% COLA indicates that annual inflation is running higher than the Fed's preferred target. That no doubt puts a strain on consumers, especially seniors on Social Security who may not have a lot of leeway in their budgets.

For context, the average retirement benefit paid by Social Security is currently $2,081.16. A 2.8% COLA raises that benefit by about $58 per month.

Last year, the Senior Citizens League found that 39% of beneficiaries depend on Social Security for 100% of their income. The group also found that only 10% of Social Security recipients are happy with their current monthly benefit, with many citing insufficient COLAs that lag inflation as a problem.

Even a larger COLA isn't great

The Senior Citizens League isn't the only outlet to publish Social Security COLA projections.

Independent analyst Mary Johnson recently raised her 2027 COLA projection from 1.7% to 3.2% after March's inflation report.

But a 3.2% COLA isn't necessarily a win. The reality is that because COLAs are tied directly to inflation, a larger Social Security raise means prices are rising faster. What seniors gain in one regard, they ultimately lose in another.

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Medicare costs are the big wild card factor

In 2026, the cost of Medicare Part B's standard monthly premium rose by $17.90 per month. Seniors who are enrolled in Social Security and Medicare at the same time pay their Part B premiums out of their benefits directly. So when there's a large increase in the cost of Part B, that year's Social Security COLA can easily get whittled down.

The Medicare Trustees are projecting another Part B hike in 2027. As of now, an official standard Part B premium has not been released.

But if next year's Part B hike is similar to 2026's, the $58 monthly increase a 2.8% COLA might produce could be eroded. All told, dual enrollees might only see their monthly benefits increase by about $40, which may not be enough to help them keep up with rising costs.

Bottom line

Based on what the Senior Citizens League reports, insufficient Social Security COLAs have clearly been impacting a lot of people's retirement plans and income. It's too soon to know exactly how large or small the 2027 Social Security COLA will be. But if you get most or all of your retirement income from your monthly benefits, you may want to use that 2.8% estimate as a guideline and plan around it, as opposed to hoping for a larger increase.

If you're worried a 2.8% COLA won't be enough in 2027, start thinking of ways to improve your finances on your own. That could mean working part-time or moving to a part of the country that's less expensive overall so your monthly Social Security checks can go further.

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