Social Security raise in 2027? New forecasts signal a higher COLA than earlier expected

New inflation figures released by the US government have raised expectations for a higher Social Security cost-of-living adjustment (COLA) increase in 2027.

Mary Johnson, an independent Social Security and Medicare policy analyst, said, as reported by CNBC, that the Social Security COLA may increase to 4.2% amid “sharply rising” gasoline, energy and fresh produce prices. This projection is up from the 3.2% COLA estimate for 2027 that Johnson had forecast last month.

The prediction is based on April consumer price index data released on 13 May. The data show that the broad consumer price index rose 3.8% over the past 12 months, the highest increase since May 2023, amid a faster-than-expected increase in prices for certain goods and services.

At the same time, the nonpartisan advocacy group ‘Senior Citizens League’ has raised its 2027 COLA projection to 3.9%, compared with the 2.8% increase it had estimated in April, CNBC said.

Why Social Security’s COLA could rise in 2027?

The upgraded COLA estimates come as Americans continue to grapple with rising living costs. Prices for essentials such as home heating oil, gasoline, tomatoes, coffee and fresh vegetables have climbed sharply over the past year, Johnson said.

According to estimates from the Senior Citizens League, Social Security benefits have lost 13.7% of their purchasing power since 2016. To make up for that decline, benefits would need to rise by 15.7% — equal to about $295.85 more per month for the average recipient.

How is Social Security payment decided?

The maximum monthly Social Security benefit varies significantly depending on retirement age. The highest possible benefit of $5,181 per month is available only to individuals who consistently earn at or above the taxable maximum income and who delay claiming until age 70.

Those who retire later in life have higher maximum benefits. For 2026, those who retired at 62 have a maximum benefit of $2,969, while those who wait until full retirement age (67) have a maximum benefit of $4,152, and those who retire at 70 have a maximum benefit of $5,181, as per the Social Security Administration.

Some beneficiaries see income increase

Owing to a major rule change last year, some Social Security beneficiaries are seeing their incomes increase. In January 2025, the Social Security Fairness Act repealed two provisions - the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which had reduced or eliminated benefits for over 2.9 million public servants.

Therefore, some beneficiaries saw an average increase of $360 per month. Others saw a monthly change of as much as $1,000, the Social Security Administration said.