2027 Social Security raise pegged between 3.2% and 3.6%

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(The Center Square) – Seniors are on track for a Social Security raise of 3.2% to 3.6% next year, money paid from a retirement fund the program's trustees say will be depleted in 2032.

Three groups have issued 2027 estimates based on July inflation data and projections for the next two months. The Committee for a Responsible Federal Budget projects the lowest, at 3.2%. AARP estimates 3.5%, which it says would raise the average retired worker's monthly benefit of about $2,086 by $73. The Senior Citizens League puts the figure highest, at 3.6%. The official COLA will be announced Oct. 14, after the release of September inflation data, and takes effect in January.

The raise would draw on the retirement trust fund – formally the Old-Age and Survivors Insurance fund – which the Social Security Board of Trustees projects will exhaust its reserves in 2032, three months earlier than previously estimated. At that point, the program could pay about 78% of scheduled benefits, an automatic 22% cut for the roughly 62 million people who receive benefits from the retirement trust fund. Trustees put Social Security's 75-year funding shortfall at $29.3 trillion and attributed the worsening outlook mainly to demographic shifts and in part to the 2025 tax law, which reduced revenue flowing to the trust funds.

The size of the annual raise has become its own flashpoint, with analysts split over whether the COLA is too generous or not generous enough. Both sides trace the disagreement to the same measure, the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which the government has used to set the COLA since 1975.

Romina Boccia, director of budget and entitlement policy at the Cato Institute, told The Center Square the index overstates the inflation seniors actually face, meaning the COLA "increases Social Security spending by more than is necessary to make seniors whole." She points to a switch to the "chained" CPI, a slower-growing measure, which she says would ease the program's shortfall. The Congressional Budget Office, in its 2024 report on options for reducing the deficit, estimated that using it for Social Security would reduce benefit outlays by about $204 billion over a decade. CBO has also found the change would not by itself move the trust fund's depletion date.

The Senior Citizens League reaches the opposite conclusion from the same starting point. The group contends CPI-W understates seniors' costs because it reflects the spending of urban workers, not retirees, who devote more of their budgets to housing and medical care. By its analysis, benefits have lost roughly 13.7% of their buying power since 2010, and it favors an index built for older Americans, the CPI-E, that would have produced higher COLAs in seven of the past 10 years.

Whatever its size, the raise lands on a program the Committee for a Responsible Federal Budget says is running out of time.

"In just six years, beneficiaries will face an abrupt 22% benefit cut – the equivalent of a roughly $500 cut in monthly benefits per beneficiary," CRFB president Maya MacGuineas said in a statement Thursday.

For the seniors who depend on the payments, the Senior Citizens League framed the stakes differently.

"Seniors don't experience inflation as a percentage on a chart. They experience it at the grocery store, at the pharmacy, in their insurance premiums and when they pay the rent," said Shannon Benton, executive director of the Senior Citizens League. "That's why the size of the COLA matters, but so does how accurately it reflects their real-world expenses."