Higher-than-expected inflation data prompts projections for a 3.9 to 4.2 percent cost-of-living adjustment in 2027.
U.S. inflation accelerated to 3.9 percent year-over-year in April, exceeding the 2.8 percent Social Security cost-of-living adjustment (COLA) recipients received in January. The gap has led analysts to project a 2027 COLA between 3.9 and 4.2 percent, up from earlier estimates.
The Social Security Administration calculates the annual adjustment using third-quarter inflation data, with the official figure finalized in October. Rising costs in housing, healthcare, and energy are outpacing current benefits, squeezing fixed incomes for seniors.
Higher COLAs may also trigger increased taxation on benefits, further offsetting gains for some recipients.