We're approaching one of Social Security's most anticipated days: the announcement of the annual cost-of-living adjustment (COLA). The official COLA will be announced on Oct. 14, but organizations have been releasing predictions based on inflation and other economic data.

One noteworthy prediction comes from a senior advocacy group, The Senior Citizens League (TSCL). Right now, it's projecting that the 2027 COLA will be 3.5%. Although this would be the largest COLA since 2023, TSCL's COLA projections have been shrinking since May, which could be good or bad news.

It could be good news because of why they're shrinking, or bad news because it means a smaller boost for Social Security recipients.

Image source: Getty Images.

How the annual COLA is calculated

First, it's worth noting just how the COLA is calculated. It's based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price changes in goods and services paid for by hourly and clerical workers.

Social Security averages CPI-W numbers from the third quarter (July, August, and September), compares that average to the CPI-W average from the previous year, and then sets the upcoming COLA as the percentage increase, rounded up to the nearest tenth of a percentage.

For example, the CPI-W average in 2025 was 2.76% higher than the 2024 average, which is how we arrived at the 2.8% COLA for 2026. The 2024 average was 2.48% higher than the 2023 average, giving us the 2.5% COLA in 2025. 

If the CPI-W is the same as or lower than the previous year, there's no COLA for the upcoming year, and benefits remain the same. This has happened only three times before, heading into 2010, 2011, and 2016.

TSCL COLA projections by the month

As different economic factors change, so does TSCL's COLA projection. Here is how they've changed over the year:

• January: 2.5%
• February: 2.8%
• March: 2.8%
• April: 2.8%
• May: 3.9%
• June: 3.8%
• July: 3.8%
• August: 3.6%
• September: 3.5%

The biggest jump was from April to May, mainly due to a spike in energy prices (gas, fuel oil, electricity) amid conflicts in the Middle East. Below is how much energy prices have jumped year over year in every month from May onward:

• May: 23.5%
• June: 15.7%
• July: 14.7%
• August: 16.3%

If you've filled up your gas tank in the past few months, these numbers probably aren't that shocking. September's energy prices are likely to stay high, so I'd be surprised if the COLA was lower than 3.5%. The CPI-W for July and August came in at 3.4% and 3.5%, respectively, so even if September cools a bit, that should realistically be the floor.

Either way, recipients can expect one of the higher COLAs we've seen in the past 30 years.