Millions of Social Security recipients now have a clearer picture of the potential size of their 2027 cost-of-living adjustment (COLA). This follows the federal government’s release of the second of three essential inflation readings. The Bureau of Labor Statistics reported that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose by 3.5% in the 12 months through August. This index reached a level of 328.481 in August, used to calculate the annual COLA for Social Security. The more commonly discussed Consumer Price Index for All Urban Consumers (CPI-U) showed a 0.4% increase from the previous month and a 3.4% rise year-over-year.
The August data brings the final calculation for the 2027 COLA closer to completion. The period used for this determination is the three-month duration concluding with September. As a result, only September’s CPI-W figure remains pending.
Importance of the COLA
Data shows that as of July, over 75.7 million individuals were receiving either Social Security, Supplemental Security Income (SSI), or both. The annual COLA determines how much these payments will increase at the beginning of the following year to reflect rising consumer prices. This adjustment has become particularly significant due to the acceleration in inflation earlier this year. In July, the CPI-W was at 327.104, marking a 3.4% increase from July 2025.
Recipients received a 2.8% COLA for 2026. This followed a succession of adjustments including 2.5% in 2025 and 3.2% in 2024. An 8.7% increase occurred in 2023, reflecting surging inflation during that period.
How CPI-W Influences COLA
The annual CPI-W inflation rate reported should not be mistaken for the final COLA. Federal law mandates that the Social Security Administration calculates the adjustment by averaging the CPI-W index levels for July, August, and September and comparing it to the same months from the last year when a COLA was in effect. The resultant percentage increase is then rounded to the nearest one-tenth of a percent.
For the 2027 calculation, the comparison is made against the third quarter of 2025. In July 2025, the CPI-W was 316.349, rising to 317.306 in August and 318.139 by September. The resulting three-month average was 317.265, yielding the 2.8% COLA effective in 2026.
Projection of COLA Amount
Exact predictions for benefit increases remain uncertain. The Committee for a Responsible Federal Budget forecasted a 3.4% COLA based on current inflation data. This would exceed the 2.8% COLA for 2026 by 0.6 percentage points. If the future 2027 COLA aligns with the average of July’s 3.4% and August’s 3.5% CPI-W readings, the average retired worker might observe an increase of about $71.97 monthly, amounting to approximately $863.60 yearly.
The present average monthly benefit for retired workers stands at $2,085.98. With a 3.45% increase, payments could rise to roughly $2,157.95 monthly or $25,895.36 annually.
For confirmation of the final COLA, beneficiaries must await the next inflation report. The Bureau of Labor Statistics is scheduled to release the September Consumer Price Index on October 14 at 8:30 a.m. ET. This will provide the final CPI-W figure for the calculation, with the Social Security Administration set to announce the official 2027 COLA that day. The new adjustment applies to benefits for December 2026, with beneficiaries receiving it in January 2027. SSI payments will also align with this annual COLA.