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Social Security 2027 COLA may hit three-year high. Should it be capped?
USA Today • • business
Key Points:
- Social Security recipients may receive a 3.5% cost-of-living adjustment (COLA) in 2027, the largest increase since 2023, based on recent inflation data, with the official announcement expected on October 14.
- The COLA is calculated using the average inflation rate from July to September, and final figures could still rise due to volatile oil prices, which have significantly impacted inflation.
- Social Security's trust fund is projected to be depleted by the end of 2032, potentially leading to a 22% reduction in benefits unless Congress acts to shore up the program.
- Medicare Part A's trust fund is expected to run dry by mid-2033, which may result in an 11% cut in spending or require substantial tax increases to cover the shortfall, while Parts B and D premiums and costs continue to rise.
- Proposed solutions to prevent Social Security cuts include raising the retirement age, increasing payroll taxes or tax caps, and adjusting COLA, but these face political challenges and concerns about the adequacy of benefits for retirees.
