Social Security recipients may get the largest pay raise in three years in 2027, according to new calculations that include the latest August inflation data.
Next year's cost-of-living-adjustment, or COLA, is forecast to be 3.5%, which is up from last month's 3.4% estimate and would be the biggest since 2023's whopping 8.7% increase, said Mary Johnson, independent Social Security and Medicare analyst.
The COLA is based on the average inflation rate in July, August and September, compared to the same period the previous year. Once September's inflation rate is known, analysts and the Social Security Administration will be able to calculate what the official 2027 COLA will be. SSA is expected to announce that on Oct. 14.
The COLA is a yearly increase to Social Security benefits meant to help payments keep up with rising costs of necessities like food, rent and utilities, but seniors have argued that it hasn't kept up with the prices they've had to pay. In recent years, Medicare Part B premiums alone, usually deducted straight from monthly Social Security checks, have swallowed much of COLA. And now, with Social Security's trust fund predicted to dry up by the end of 2032, some policy analysts are looking to cap the COLA in various ways.
"Pay close attention to the debate over Social Security solvency now," Johnson said. "It's important for midterm voters to understand the changes to Social Security that members of Congress face to shore up the program. COLAs and your Social Security benefits are in the crosshairs."