Social Security retirees could pocket a bigger 2027 COLA
The 2027 cost-of-living adjustment for Social Security could come in well above the 2.8% raise that took effect in January.
Two of the most closely watched forecasts for the annual raise shifted after the Bureau of Labor Statistics released May's consumer price index data.
Inflation hit 4.2% year over year, the fastest pace since April 2023, driven by rising energy costs linked to the U.S.-Iran war.
One projection jumped sharply while the other edged down, and the gap between them now spans nearly a full percentage point.
The size of the raise matters for the roughly 75 million Americans who depend on Social Security and Supplemental Security Income benefits, according to the Social Security Administration's most recent Monthly Statistical Snapshot.
But a separate annual cost that is deducted from checks before they arrive could reduce whatever increase retirees ultimately receive.
Two forecasts project a larger 2027 Social Security COLA
Independent Social Security and Medicare policy analyst Mary Johnson raised her 2027 COLA projection to 4.7%, up from 4.2% last month, citing May's inflation report, CNBC reported.
The Senior Citizens League, a nonpartisan advocacy group for older Americans, lowered its 2027 projection to 3.8% after reviewing the same data.
That figure edged down from the group's May estimate of 3.9%, though the organization did not explain the slight revision, CNBC noted.
A 3.8% COLA would lift the average retiree's monthly benefit by roughly $77, from about $2,026 to $2,103, according to the Senior Citizens League.
Johnson's 4.7% projection would boost benefits even more, making it the largest adjustment since the 8.7% COLA that took effect in 2023.
This year's 2.8% adjustment added about $56 to the average monthly benefit, a figure Johnson said falls far short of what retirees need. The COLA would have needed to deliver $94 per month, rather than $56, to keep pace with the actual cost of living, she indicated.
Energy prices tied to the Iran war are pushing Johnson's COLA estimate higher
The inflation measure used for the COLA calculation jumped 4.4% year over year as of May, according to the Bureau of Labor Statistics.
That measure, formally the Consumer Price Index for Urban Wage Earners and Clerical Workers, has not risen this sharply since 2022.
Gasoline prices surged 40.5% compared with a year ago, airfares climbed 26.7%, and fuel oil jumped 58.9% over the same period, the BLS data showed.
Energy costs alone accounted for more than 60% of the monthly increase in consumer prices during May, the BLS report indicated.
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Iranian forces declared the Strait of Hormuz closed on March 4, 2026, disrupting a waterway that handles roughly 27% of global maritime crude oil and petroleum trade, according to the Congressional Research Service.
The closure has driven up fuel costs across the economy. Johnson indicated she expects the COLA estimate to keep climbing, with gasoline prices posing the largest upside risk to her forecast.
"There's a considerable likelihood that it's going to climb even higher than 4.7% as data continues to come in, especially on the gasoline prices," Johnson told CNBC.
Core inflation, which excludes food and energy, rose a more moderate 2.9% in May, BlackRock strategist Gargi Chaudhuri observed in a research note.
That reading suggests higher energy costs have not yet spread into other price categories, a trend that could limit the COLA's upside.
How Medicare Part B premiums could offset the 2027 Social Security raise
A larger COLA does not guarantee an equal boost in take-home pay, because Medicare Part B premiums are deducted before checks are issued.
That deduction has consistently reduced the net value of COLA increases for retirees over the past two decades of rising health care spending.
The standard monthly Part B premium in 2026 is $202.90, up $17.90 from $185 in 2025, the Centers for Medicare and Medicaid Services confirmed.
That 9.7% rise consumed a significant share of the $56 monthly increase the 2.8% COLA delivered to the average retiree this year.
For retirees living on fixed incomes, the costs that matter most, especially healthcare, housing, utilities, and insurance, continue to rise faster than prices in the rest of the economy, silently wrenching seniors dry.
The 2025 Medicare Trustees Report projected, under its intermediate assumptions, a 2027 Part B premium of $218.60 per month, a roughly $15.70 increase from the current standard rate. CMS will announce the official 2027 premium in November 2026.
Under the Senior Citizens League's 3.8% COLA estimate, that projected premium hike would absorb about 20% of the $77 monthly raise before retirees see it.
From 2005 to 2024, Part B premiums grew an average of 5.5% per year, while Social Security COLAs averaged just 2.6%, Johnson indicated.
That growing gap has left Social Security benefits with 13.7% less purchasing power than they held in 2016, the Senior Citizens League estimated.
What the COLA calculation timeline means for 2027 Social Security checks
The Social Security Administration typically confirms the official COLA in October, after the Bureau of Labor Statistics releases September CPI-W data, and the final 2027 figure could land higher or lower than current projections.
The agency calculates the adjustment by comparing the average CPI-W for July through September against the same three months from the prior year, according to the Social Security Administration.
That timeline means the next three months of inflation data will determine the final number, with energy prices serving as the most significant variable.
Before the Iran war began driving up oil prices, Johnson had estimated a 2027 COLA of just 1.2% based on January 2026 data.
If oil prices decline this summer, the COLA could retreat toward the Senior Citizens League's 3.8% projection or potentially lower.
Sustained energy inflation through September, driven by the U.S.-Iran war, however, would likely push the final COLA past Johnson's 4.7% estimate.
Retirees face elevated costs for gasoline, groceries, and health care while waiting months for the new adjustment to take effect.
Johnson noted that the months ahead will be particularly challenging for older adults on fixed incomes, who are already strained by price increases.
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This story was originally published June 14, 2026 at 8:56 AM.