By Samuel Gonzalez
The 2027 Social Security COLA could approach 4%; At least that is the new estimate from an organization that represents older adults in the country. This increase comes in a context where inflation is once again putting pressure on the cost of living, especially affecting millions of retirees who depend on this income to cover their basic expenses.
The most recent projection comes from The Senior Residents League, where estimates that the cost of living adjustment, known as COLA, would be approximately 3.9%a figure higher than expected at the beginning of the year.
“This is a significant increase from the beginning of the year, when our projection was generally between 2% and 3%,” Alex Moore, a statistician with the Senior Citizens League, said in an email.
The COLA is intended to adjust Social Security benefits so that they do not lose value in the face of inflation. However, its calculation does not always reflect the real increase in daily expenses faced by older adults.
According to the Social Security Administration (SSA), the average payment for a retiree is around $2,071 per month. With a 3.9% increase, the adjustment would represent about $80.77 additional dollars, raising the average monthly benefit to approximately $2,152 dollars.
Although this increase may seem positive, experts warn that it does not necessarily offset the increase in key items such as housing, food and health, which continue to register constant increases.
Recent inflation also keeps pressure on everyone’s pockets in the United States, especially seniors. The Consumer Price Index (CPI) has shown annual increases close to 3.3% and 3.8% in recent months, indicating that prices continue to rise at a relevant pace. In this scenario, the impact of the cost of energy has been one of the most sensitive factors.
“As the year progresses, rising oil prices could make things worse,” Moore said. “Higher energy prices make it more expensive to grow crops, transport goods and services, and even run production machinery in factories.”
Another estimate of Committee for a Responsible Federal Budget (CRFB) coincides in a nearby projection, calculating a COLA of 3.8%, although with a possible range between 3% and 4.5% depending on the behavior of inflation.
However, increased benefits do not necessarily mean greater stability for retirees. A recent analysis by The Senior Residents League estimates that Social Security benefits have lost almost 14% of their value in the last decademainly because the index used to calculate the COLA does not fully reflect the real expenses of older people, especially on health.
The final COLA for 2027 will not be announced until October of next year, but every time the inflation data in the United States moves, new calculations emerge.
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