The Social Security cost-of-living adjustment for next year is estimated to be higher — with one independent analyst predicting it could reach 4.7%.
Based on the Consumer Price Index data released Wednesday, the Senior Citizens League predicts COLA will be 3.8%, or 1.0 percentage point higher than this year's COLA of 2.8%. Mary Johnson, an independent Social Security and Medicare policy analyst, predicts a 4.7% increase for 2027.
The Consumer Price Index for All Urban Consumers increased 0.5% on a seasonally adjusted basis in May, after rising 0.6% in April, the U.S. Bureau of Labor Statistics reported Wednesday. Over the last 12 months, the all items index increased 4.2% before seasonal adjustment.
"We're seeing inflation on the rise when more than half of seniors already can't afford basic living standards," Shannon Benton, the League's executive director, said Wednesday in a statement. "We're talking about food, a roof over their head, and transportation. Many seniors already have to skip doctor's appointments due to costs, which costs all of us more in the long run when we swap preventative care for emergency care."
Inflation as measured by the index used to calculate the COLA is growing at the "fastest pace in four years, since 2022," Johnson said in another statement. "This is hard to quantify as it hits consumers now, but it clearly is causing enormous cost pressures especially difficult for low income and older Americans living on fixed incomes." Consumers are spending more at the supermarket but bringing home less every trip, Johnson said.
"Social Security recipients received a 2.8% COLA this year raising average monthly benefits of $2,000 about $56, but would need $94 per month to keep up with May inflation," Johnson estimates.
TSCL estimates that 24.6 million seniors, or 44% of the country's approximately 55.8 million retirement-age population, depend on Social Security for 100% of their income, according to new research released by the group Wednesday.
"That's up from 39%, or 21.8 million, last year," Benton said. "This leaves many seniors in the lurch, with 54% living on less than $2,000 a month. For reference, average rent for a one-bedroom apartment in the U.S. runs more than $1,500 a month."
Longer-term data trends, according to Johnson, "indicate that we haven't reached a peak yet." There are four more months of data to come in and Johnson said her estimate is likely to change before the COLA — based on third-quarter CPI data — is announced in October.
Credit: David Palmer/ALM
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