A larger cost-of-living adjustment, or COLA, in 2027 for Social Security recipients if current inflation trends continue. At the same time, lawmakers have reintroduced legislation that would increase benefits and overhaul the retirement program.
These developments underscore the challenges in helping retirees keep up with rising costs while preserving the program’s finances for future generations. Advocates say the proposed reforms address many of seniors’ concerns, but the legislation faces an uphill battle in Congress.
What is the projected COLA for 2027?
The nonpartisan advocacy group, The Senior Citizens League, projects a 3.8 percent COLA for 2027. If that estimate holds, the average monthly Social Security benefit would increase from $1,937.53 to $2,011.15, or a $73.62 change.
This projection remains unchanged from the group’s previous forecast, which is higher than the 2.8 percent COLA beneficiaries received this year.
The Social Security Administration will release the official 2027 COLA in October after the government releases third-quarter inflation data.
Why does Social Security receive annual COLAs?
Officials design COLAs to help beneficiaries keep their purchasing power steady as prices rise.
At present, the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W, is the basis of annual adjustments. Critics claim the index reflects the spending habits of working-age Americans but not of the retirees, who spend more on health care, prescription drugs, and housing.
What is the Social Security 2100 Act?
The Social Security 2100 Act is a proposal that would make sweeping changes to the retirement program.
Among its key provisions, the bill would increase benefits by 2 percent across the board; raise the minimum benefit to 125 percent of the federal poverty level; base future COLAs on the Consumer Price Index for the Elderly, or CPI-E; and update the formula used to calculate benefits.
Supporters of the bill view the changes as providing greater financial security for retirees, especially the lower-income seniors.
The proposed measure would gradually increase the Social Security payroll tax and apply it to annual earnings above $400,000.
Those changes would extend the program’s trust fund solvency by about 32 years, The Senior Citizens League said.
Why do advocates support the bill?
The advocacy group says many older Americans want both higher benefits and an inflation measure that reflects the expenditure patterns of seniors.
One provision receiving particular attention would increase the minimum monthly benefit above the federal poverty line. That is $15,650 a year, or about $1,304 a month for a household of one person. TSCL estimates that roughly 1 in 10 seniors, or about 5.6 million seniors, live on less than $1,000 a month.
Executive Director Shannon Benton said the legislation represents the most comprehensive measure to strengthen Social Security while addressing rising poverty among the elderly.
But instead of one-time payments, the bill focuses on permanent benefit changes.
That is why TSCL has supported a separate bill, the Social Security Emergency Inflation Relief Act, which would provide an additional $200 a month for six months, or a total of $1,200.
Why is the bill unlikely to pass?
Despite support from advocacy groups, the legislation faces significant political obstacles.
Firstly, the measure would increase federal spending while raising payroll taxes on higher-income earners. These issues usually divide Congress. Democrats have generally favored expanding benefits by raising taxes on wealthier Americans. But many Republicans oppose tax increases and are inclined to support changes such as slowing future benefit growth or raising the age of retirement.
The measure does not have broad bipartisan support. Several versions of the Social Security 2100 Act have been introduced to Congress since 2017. These versions, however, failed to advance beyond committee.
Lawmakers will address Social Security’s finances before the trust fund is projected to become insolvent in late 2032.
GovTrack, a legislative tracking service, projects that the bill has a zero percent chance of becoming law, citing the lack of momentum in the present Congress to act.
