Upcoming CPI Data Could Change Social Security COLA and When New Payments Begin

July's Consumer Price Index report could give Social Security beneficiaries a better idea of how much of a cost of living increase they will see in 2027. The upcoming data from the Bureau of Labor Statistics on inflation rates is one of three key months which decide how much of a boost in funds is coming.

Early forecasts predict a higher social security payment bump than last year's 2.8% but with ever-increasing inflation hitting everyday spending in groceries, utilities and gas prices it may not be enough to ease the financial burden seniors are experiencing.

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Here's what you need to know about why these next three reports are important and when that cost-of-living increase will hit.

What Previous CPI Reports Indicate

Recent CPI reports give a rough sense of where things stand. Over the 12 months ending in June, the BLS reported that consumer prices rose 3.5%, with the CPI-W up by the same amount. 

The Senior Citizen's League has predicted a 3.9% increase for 2027 based of the reports to date. That would increase the average retiree's check by $81.17.

But the numbers for July, August and September can still move by a meaningful amount in either direction, and nothing is official until the BLS reports those final Q3 figures. 

The Math Behind Your (Future) Check

The annual Social Security cost-of-living adjustment is based on a formula, not some number grabbed out of thin air. Specifically, it’s based on the year-over-year change in the CPI-W, which is a modified form of the Consumer Price Index tailored “Urban Wage Earners and Clerical Workers,” per the Social Security Administration. 

Just like the regular CPI, the CPI-W is calculated by the Bureau of Labor Statistics and tracked every month. However, for purposes of the COLA, the Social Security Administration only compares the annual change in the CPI-W over July, August and September. 

July’s numbers will post on August 12, with the August and September numbers following in the next two months.

Why Only Three Months Count

If the SSA looked back and used CPI-W data for the trailing 12 months, it might give a better yearly average figure. But it would also use inflation data that would be 15 months old by the time checks actually go out, which would not be an accurate reflection of current costs.

From the perspective of the SSA, using Q3 data keeps the comparison recent while still leaving three months to calculate the percentage, notify beneficiaries and set up payment systems in time before updated benefits go out. That three-month runway has been built into the formula since 1983, according to SSA's history of the adjustment. 

When You'll See the Increase

COLA notices typically arrive in the mySocialSecurity message center in late November, per the SSA.  The new payments amounts will show up starting January 2027.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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