A customer fills up a vehicle with gasoline on October 24, 2025 in Miami, Florida.
Joe Radle | Getty Images
Social Security cost-of-living adjustments could rise even higher in 2027 as new government data shows inflation and gasoline prices rising, according to a new estimate.
Rising gas prices could push the cost of living adjustment (COLA) to 3.2% in 2027, according to Mary Johnson, an independent Social Security and Medicare policy analyst. This was higher than the 1.7% COLA increase that Prime Minister Boris Johnson had predicted in March.
Mr Johnson’s estimates are based on consumer price index data for March released on Friday that showed inflation rose to its highest level in nearly two years.
Social Security and Supplemental Security income beneficiaries receive annual benefit adjustments through COLAs, which are intended to ensure that inflation does not weaken the purchasing power of benefits.
Separately, the Coalition on Senior Citizens, a nonpartisan seniors organization, estimates that the COLA could be 2.8% in 2027, based on the latest inflation data, unchanged from its March forecast.
In 2026, approximately 75 million Social Security and Supplemental Security income beneficiaries received a 2.8% cost-of-living adjustment. This has increased retirement benefits by an average of $56 per month since January, according to the Social Security Administration.
According to the Social Security Administration, the average COLA interest rate over the past 10 years was 3.1%. However, as inflation soared after the coronavirus pandemic, beneficiaries recorded record increases of 5.9% in 2022 and 8.7% in 2023. Since then, it has continued to increase more slowly in recent years.
How COLA reflects inflation
The predicted increase in COLA prices isn’t necessarily good news for retirees who have to absorb the shock of higher prices, Johnson said.
“They always felt that COLA underestimated the real experience of inflation,” Johnson said.
According to a September AARP survey, 77% of Americans age 50 and older don’t think a 3% COLA is enough to keep up with price increases.
According to the AARP survey, about 72% of respondents said an increase of 5% or more would cover their daily expenses, and 26% said they would need an 8% increase to keep up with rising costs.
Social Security COLAs are based on the Consumer Price Index for Urban Wage and Office Workers (CPI-W), which tracks price changes for specific goods and services.
The annual COLA adjustment is calculated by comparing the CPI-W data for the third quarter of the current year with the CPI-W data for the third quarter of the previous year. The annual increase determines your COLA.
The CPI-W rose 3.3% over the past 12 months, according to data released by the Bureau of Labor Statistics on Friday.
