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Higher oil prices could push up inflation in the coming months, which could lead to higher estimates of Social Security cost-of-living adjustments in 2027.
“Geographical and political tensions are currently driving up oil prices, which will continue to drive my COLA estimates higher,” Mary Johnson, an independent Social Security and Medicare analyst, said in an email.
Based on new government inflation data from February, Social Security COLAs in 2027 could be 1.7%, Johnson said. This was up from the 1.2% Prime Minister Boris Johnson had predicted last month.
Separately, the Coalition on Senior Citizens, a nonpartisan seniors organization, forecasts the cost of living adjustment will be 2.8% in 2027, unchanged from last month’s forecast.
Comparison of annual increases in social security
Social Security cost-of-living adjustments change your benefits each year to keep your monthly payments in line with inflation.
In 2026, approximately 75 million Social Security and Supplemental Security income beneficiaries received a 2.8% cost-of-living adjustment. This increased retirement benefits by an average of $56 per month, the Social Security Administration announced in October. However, these increases can vary and are typically deducted from your monthly benefit check, especially if your Medicare Part B premium increases each year.
According to the agency, Social Security COLAs have averaged about 3.1% over the past 10 years.
In recent years, the annual increase in beneficiaries has increased significantly as inflation soared following the coronavirus pandemic. The COLA for 2022 and 2023 was 5.9% and 8.7%, respectively. At the time, both increases were the highest in 40 years.
Since then, Social Security COLA increases have been closer to average.
Factors influencing COLA projections for 2027
February consumer price index data released on Wednesday showed 12-month inflation rose 2.4%.
This data does not include the recent oil shock caused by the Iran war. Gasoline prices have fallen 5.6% over the past 12 months, according to February CPI data. However, Johnson said the March numbers are likely to show an increase in these prices, which could push up the 2027 COLA forecast.
Retirees are already facing higher utility bills because of rising costs for household heating oil, natural gas and electricity, he said.
Tariff policies can also lead to higher consumer costs.
Social Security COLAs are calculated by comparing inflation data for the third quarter of this year with data for the third quarter of the previous year. The COLA percentage is determined by the Consumer Price Index for Urban Wage Earners and Office Workers (CPI-W), which increases year over year.
As a result, COLAs may lag behind rising inflation or may rise above the current pace of inflation.
The CPI-W rose 2.2% over the past 12 months as of February, which was lower than the 2026 COLA of 2.8%.
However, how inflation affects individuals and household budgets varies depending on their spending habits and individual inflation rates.
Next year’s COLA is typically announced by the Social Security Administration in October.
