A major inflation spike tied to unrest in the Middle East has prompted the Senior Citizens League to raise its forecast for next year’s Social Security cost-of-living adjustment, projecting a 3.9% COLA for 2027 — up from the 2.8% increase retirees received this year. Under the new estimate, the average retired worker’s monthly benefit would climb by $81.17, from $2,081.16 to $2,162.33, the advocacy group said.
The revision follows a hotter-than-expected Consumer Price Index reading for April. The CPI rose 3.8% year over year in April, above economists’ consensus of 3.7% and up from March’s 3.3% pace. Energy costs were the single biggest driver of the month’s uptick, accounting for roughly 40% of the increase, while shelter and food prices also accelerated — a combination that tends to exert outsized pressure on fixed-income households.
“Many seniors already forgo essentials like medical care because they can’t keep up with rising costs,” Senior Citizens League executive director Shannon Benton told Yahoo Finance. Benton and other advocates reiterated a long-standing criticism of how the federal COLA is calculated: the Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which reflects the spending patterns of working Americans rather than retirees. The Senior Citizens League and other groups have pushed for the COLA to be tied to the CPI-E, a price measure designed for older households that places greater weight on healthcare and prescription costs.
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Benton pointed to the cumulative impact of years of modest COLAs, saying that Social Security benefits have lost significant purchasing power; compared with 2016, she estimates benefits are worth about 86.3 cents on the dollar, a decline of nearly 14%. “The CPI-W doesn’t reflect their reality,” she said. “It’s based on the spending of younger workers, not retirees who face rising costs in healthcare, housing, and prescriptions.”
Some analysts are even more pessimistic about the size of next year’s adjustment. Mary Johnson, a Social Security expert cited by Yahoo Finance, projected a 4.2% COLA for 2027, arguing that continued spikes in gasoline, energy and fresh-produce prices could push the annual inflation measure higher. “These sorts of price spikes are every retiree’s worst nightmare,” she said.
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The Social Security Administration will not declare the official COLA until mid-October, when it calculates the percentage change in the CPI-W for the third quarter compared with the same period a year earlier. TSCL’s updated forecast represents a notable reversal from its April projection — when the group had estimated the 2027 COLA at about 2.8% — underscoring how volatile energy and food markets can quickly alter beneficiaries’ financial outlooks. Even if a higher COLA materializes, advocates warn it may not fully offset the specific inflation pressures facing older Americans.
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