MW Social Security's COLA could rise in 2027, boosted by war impact and inflation

By Jessica Hall

COLA could add about $87 a month to Social Security benefits

Surging gasoline and energy prices, as well as the cost of groceries, have pushed the COLA forecast higher.

Social Security's cost-of-living adjustment could be as high as 4.2% in 2027 - up from 2.8% this year - due to rising inflation, which has jumped to a three-year high, and the impact of the war with Iran, Social Security analysts said on Tuesday.

"This represents the highest rate of inflation since 2022 and a potentially significant erosion in many consumers' standard of living," said Mary Johnson, an independent Social Security and Medicare policy analyst who has been tracking the COLA for 30 years.

Before the war with Iran started, Johnson had predicted the COLA would be 1.2% for 2027. However, gasoline and energy prices, as well as the cost of fresh produce and other groceries, have surged since the start of the conflict, pushing the COLA forecast much higher, to 4.2%, Johnson said.

The COLA is not a raise but an adjustment to keep pace with inflation. It is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which is now at 3.9% year over year, according to inflation data released Tuesday by the Bureau of Labor Statistics. Overall, the yearly rate of inflation climbed to 3.8%, up from 3.3% in the prior month.

Read: Inflation jumps to 3-year high, CPI shows, and that's not the end of it

The average Social Security check is about $2,071, according to the Social Security Administration. A 4.2% COLA would add about $87 a month.

The Senior Citizens league, an advocacy group for older adults, predicted the 2027 COLA could climb to 3.9%. That increase would be consumed by higher costs for Medicare premiums, housing, utilities and groceries, the group said. The group's previous forecast, published last month, was for a COLA of 2.8%.

Older people are cutting back on essential healthcare services in order to make ends meet, the group said. A recent survey by the Senior Citizens League found that 57% of older adults had skipped one or more medical products or services in the past year due to costs.

"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," said Shannon Benton, executive director of the Senior Citizens League. "This makes the national affordability conversation even more important than ever."

-Jessica Hall

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 12, 2026 10:54 ET (14:54 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.