Retirees who spent June planning around a generous 2027 Social Security cost-of-living adjustment (COLA) now face a much smaller number. The latest consumer price data has forced one of the most closely watched independent analysts to sharply slash her projection, while a second forecaster held steady, CNBC reported.The estimates still put the 2027 raise above the 2.8% increase that took effect in January 2026, so monthly checks will grow. Whether that growth can keep pace with grocery prices, utility bills, and climbing Medicare premiums is a different question entirely.About 75 million Americans collect Social Security or Supplemental Security Income benefits, and the final number will directly affect household budgets, according to the Social Security Administration. The gap between what beneficiaries expected and the smaller raise they may end up receiving could force difficult spending adjustments heading into 2027.Independent forecasts now cluster between 3.7% and 3.8% for 2027 COLAThe two leading independent projections now cluster around the mid-3% range, with Johnson’s estimate falling well below the figure she projected just weeks earlier.Meanwhile, the Senior Citizens League, a nonpartisan advocacy group for older Americans, held its 2027 COLA projection steady at 3.8% after reviewing June data. Independent Social Security and Medicare analyst Mary Johnson lowered her forecast to 3.7%, down sharply from 4.7% a month earlier, Newsweek reported.At 3.8%, the average retired worker collecting roughly $2,081 per month would gain about $79, according to the SSA data.Under Johnson’s 3.7% estimate, that monthly increase would come closer to $77 when applied to the same average benefit reported by the SSA.Both projections still exceed the 2.8% raise from January, which added about $56 to the typical monthly check for retired workers. But neither figure approaches the 4.7% boost that Johnson’s earlier model predicted, a number that had raised expectations among beneficiaries.Cooling June inflation drove sharp downward revision in Social Security COLA forecastsThe Bureau of Labor Statistics reported in July that consumer prices rose 3.5% year over year in June, a sharp deceleration from May’s 4.2% rate. The Consumer Price Index for Urban Wage Earners and Clerical Workers, the metric used to calculate Social Security’s annual adjustment, matched that 3.5% reading.More Social Security:Fidelity offers a lifeline to millions before Social Security shiftsSocial Security retirees could pocket a bigger 2027 raiseSocial Security’s funds will run out sooner than expectedFalling energy prices drove much of the deceleration in June, though tensions between the United States and Iran continue to cloud the oil price outlook. Whether that energy price relief persists through the critical third quarter will directly shape the final adjustment announced in October.”This is a significant drop in inflation, and one that we’ve rarely seen in the June CPI data over the past five years,” Johnson said, as reported by CNBC.The Social Security Administration bases the official COLA on third-quarter Consumer Price Index data from July, August, and September each year. It compares that three-month average to the same period a year earlier, so the final number could still shift before the October announcement.
Cooling June inflation lowered Social Security COLA forecasts, but July through September inflation will determine the final 2027 increase.PIKSEL / Getty Images
Social Security benefits have lost nearly 14% of their buying power since 2016The projected raise arrives against a backdrop of steadily declining purchasing power that has accumulated over the past decade for retirees.Benefits are now worth only about 86.3 cents on the dollar compared with their 2016 value, the Senior Citizens League estimated. The group’s 2026 Loss of Buying Power study attributed the erosion to annual COLAs that consistently lag real-world price increases for older Americans.Payments would need to increase by 15.7%, or roughly $296 per month for the average beneficiary, to recover that lost ground, the group indicated.Rich Johnson, vice president of financial security at the AARP Public Policy Institute, told Yahoo News that the formula used to calculate annual benefit increases does not reflect how older Americans actually spend their money, compounding the erosion of buying power over time.The COLA has been sometimes viewed as inadequate, in that it does not reflect the spending patterns of Social Security beneficiaries. People 62 and older spend more on housing and medical care, for example, and less on transportation, food and beverages, and apparel.”A 3.8% COLA might sound like a lot compared to last year’s 2.8%, but it won’t be enough to make up the difference between what seniors bring in and what they need to live with dignity,” Shannon Benton, executive director of the Senior Citizens League, warned.The group’s 2026 Senior Survey found that 44% of retirement-age Americans now depend entirely on Social Security for income, up from 39% a year ago.Official Social Security COLA hinges on third-quarter inflation dataThe Social Security Administration typically releases the final COLA figure in mid-October, and the 2027 number is expected on Oct. 14 specifically. Three months of inflation data between now and then will determine whether the adjustment lands near 3.7%, swings higher, or drops further.Oil price volatility remains the most significant variable for retirees tracking the forecast, as energy costs ripple through food and transportation prices. Stephanie Ford, senior vice president at Wealth Enhancement Group, told CNBC Select that seniors should treat Social Security as a supplement to other retirement income, rather than a replacement. The CNBC Select piece Ford was featured in also pointed to high-yield savings accounts and CDs as vehicles that can help close the gap.”A COLA isn’t a raise,” Michael Ryan, founder of MichaelRyanMoney.com, told Newsweek. “It’s an attempt to keep a fixed income from falling behind. Sometimes it fails.”Related: Bigger 2027 COLA may not help retirees as expected