The Social Security cost-of-living adjustment (COLA) for 2027 has been set at 3.6 percent, the federal government announced today, but proposals to change how the annual increase is calculated could deliver larger adjustments in future years.
The announcement, which will boost benefits by hundreds of dollars for millions of Americans, comes as lawmakers and advocacy groups push for using an inflation measure that better reflects older Americans’ expenses. Research from The Senior Citizens League (TSCL) suggests the change could add thousands of dollars to benefits across a retirement, although the outcome would depend on future inflation.
Two proposals—the Boosting Benefits and COLAs for Seniors Act and the Social Security Expansion Act—would introduce the use of an inflation index for older consumers into the calculation.
“The COLA adjustment will help. But it doesn’t fully account for the costs that Social Security beneficiaries face,” Nancy Altman, president of Social Security Works, said following the announcement. “That’s because the measure used to calculate it, the CPI-W, is designed to reflect the costs of working people — not retirees, who spend a higher percentage of their income on healthcare, housing, and other bare necessities.”
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What Would the Proposals Change?
As it stands, the COLA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. It compares the index’s third-quarter average with the third-quarter average in the last year a COLA was determined.
Democratic Representative Nikki Budzinski’s proposed Boosting Benefits and COLAs for Seniors Act, introduced in October 2025, would use either CPI-W or the Consumer Price Index for Elderly Consumers, known as CPI-E, whichever produces the higher adjustment. A companion bill for the Senate was introduced by Democrat Richard Blumenthal.
That provision would protect beneficiaries against receiving a smaller increase in a year when CPI-E trails the CPI-W. The legislation would also require the Bureau of Labor Statistics (BLS) to publish an official older-consumer index, using its existing research version during the transition.
Senator Kirstin Gillibrand, a cosponsor of the Senate version, said following today’s COLA announcement that it is “not enough to make up for skyrocketing costs for groceries, gas, heating, and healthcare in President Trump’s America” and said she is fighting to “protect and expand Social Security benefits long-term by changing the formula used to calculate COLAs to better account for the expenses that seniors face.”
Independent Senator Bernie Sanders’ Social Security Expansion Act, introduced in February 2025, would replace the existing measure with CPI-E. His proposal is part of a package pushing for benefit increases and additional revenue for the program, including Social Security taxes on earnings above $250,000.
How Much More Could Retirees Receive?
TSCL’s October 2025 analysis estimated that an average person who retired in 1999 would have received nearly $5,000 more across a 25-year retirement had adjustments been calculated using CPI-E.
For someone retiring in 2024, it projected just over $12,000 in additional benefits across 25 years, assuming long-term inflation patterns continued. The group used historical adjustments where available and average adjustments for future years, making the figure a modeled estimate rather than a guaranteed gain.
The argument for changing the index rests on differences in household spending, as older Americans tend to devote larger shares of their budgets to medical care and shelter, categories whose prices have historically increased faster than many other expenses. The CPI-W measures the spending of certain workers, rather than the elderly, who are more likely to not work.
TSCL’s historical comparison shows that, however, using the CPI-E it would have generated smaller increases for 2019, 2022 and 2023, despite generally delivering higher adjustments over time.
TSCL also advocates going further with its preferred approach, which it calls “CPI-BEST,” which would guarantee a minimum 3 percent COLA and use the higher of CPI-W or CPI-E when either produces a larger adjustment.
Why Are Advocates Seeking Changes?
AARP, an advocacy group for the over 50s, said there is widespread concern that annual increases are insufficient to keep many seniors above water when it comes to their finances.
A survey conducted between September 17 and 21 among 1,023 U.S. adults aged over 50 found that 76 percent of adults aged 50 and older considered a projected 3.5 percent—0.1 points below the confirmed 3.6 percent increase—COLA as inadequate. Seventy-one percent said an increase between 5 and 8 percent would be more sufficient to help recipients with paying for everyday expenses.
TSCL renewed its criticism after the COLA announcement. Executive Director Shannon Benton said: “Congress cannot control every price increase, but it can act to ensure that the COLA formula does not leave people behind.”
“The people who depend on these benefits cannot afford another year of empty promises, inadequate adjustments, and shrinking purchasing power,” Benton continued. “They deserve more than a cost-of-living adjustment on paper; they deserve one that works in real life. Congress has the authority to address this problem, the responsibility to protect the people affected by it, and no excuse for continuing to ignore the consequences. The time for action is now—not after another year of rising bills and lost buying power.”
What Are the Trade-Offs?
The BLS has cautioned that the CPI-E has its limitations, however. Its household sample is relatively small, while its underlying geographic areas, retailers and priced items are selected for the broader urban population, so it may not fully represent older consumers.
Higher adjustments would also increase program costs. SSA actuaries estimate that a modeled switch to CPI-E beginning in December 2028 would increase annual COLAs by about 0.15 percentage points on average, but would worsen the 75-year actuarial balance by 0.33 percent of taxable payroll at a time when the trust funds used to help pay benefits are at risk of running out in the coming years.
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Daniel Orton and Gray R. Thomas