Social Security's 2027 raise looks bigger than it will feel

Two of the three CPI-W readings that determine Social Security's annual raise are now in, and the two forecasters who track the number most closely have converged on 3.5% for 2027, the Senior Citizens League trimming its estimate from 3.6% a month ago while Mary Johnson's has held at 3.5%. The third reading, September's CPI, arrives October 14 from the Bureau of Labor Statistics, and if the number settles there it would be the largest increase beneficiaries have received in three years.

On the current average benefit of $1,940.08 a month, 3.5% is $67.90 — a January 2027 check of $2,007.98 and roughly $815 more across the year. What that buys is the harder question, and TSCL's own survey work argues it buys less than the index implies.

Executive director Shannon Benton's objection is to the index itself: it tracks urban wage earners rather than the households it pays, so it misses the categories where older budgets are concentrated. "The CPI-W captures the experience of urban wage earners, which doesn't represent the average senior's budget," she said. The evidence TSCL collects supports the complaint: its latest Senior Survey found 44% of retirees, roughly 24.8 million people, say Social Security is all they have to live on, up from 39% a year earlier, and 89% of older Americans called the 2026 COLA too low and said their checks would fall behind inflation.

Plan advisers have a stake in this number that benefit-administration coverage misses, because Social Security is the one lifetime income stream most participants already own, and the people receiving it are telling pollsters it is losing ground. As this publication has argued, the contest among target-date and QDIA providers has moved to in-plan income features, and an official raise that is the biggest in three years while polling as insufficient is precisely the case a guaranteed floor inside the plan makes for itself. The floor inside the plan does not get reset every October by a wage-earner index.

The coverage half is more basic, because small employers tend to overestimate what a retirement plan costs and underestimate what it does for recruitment and retention, according to a Boston College brief this publication covered in August, and coverage is where supplemental income has to exist before plan design can do anything with it.

Johnson's caveat is the one live variable: inflation is pointing higher in the final month of data, though whether it is high enough to move the figure is open. September's CPI prints October 14 and settles both the official number and whether the third reading shifted it off 3.5%.