January CPI sets up slimmer-than-desired COLA for retirees, warns advocacy group

The next Social Security raise is shaping up to be modest even as many older Americans say they are already cutting back on basic medical care, putting fresh pressure on advisors who build retirement income plans around the annual cost-of-living adjustment.

The Senior Citizens League now projects a 2.8% Social Security cost-of-living adjustment for 2027, based on the latest inflation data.

That's up slightly from the group’s earlier 2.5% estimate and matches the 2026 COLA, but is still likely to feel underwhelming to clients who have seen housing, food and medical bills climb faster in recent years.

Research by the advocacy group estimates that 57.6% of the country’s roughly 55.8 million seniors skipped at least one health care product or service in the past year to save money. The most commonly delayed or abandoned services were dental care (42.3%), vision care (28.8%) and hearing services (19.6%) – categories that tend to be both recurring and preventive in nature.

Those trade-offs are most acute among retirees who rely heavily on Social Security. Only 18.9% of “financially healthy” seniors – those who report living comfortably with enough savings to sustain their retirement – reported skipping a medical product or service. Among those the group describes as financially at risk, whose incomes do not fully cover essentials, that share jumps to 78.7%.

“The projected 2027 COLA will surely leave seniors dissatisfied and frustrated,” Shannon Benton, executive director at the Senior Citizens League, said in a statement on Friday. “The reality is most older Americans constantly tell us they believe the CPI-W, the measure used to calculate the COLA, underestimates inflation as they see it.”

The squeeze is especially visible in Medicare. The standard Medicare Part B premium rose 9.7% in 2026, from $185 to $202.90, more than three times the 2.8% Social Security bump that year, according to the group. Part B premiums also climbed faster than the COLA in 2024 and 2025, eroding real income for many beneficiaries before they even address out-of-pocket costs.

Read more: Health costs are quietly eroding retirees’ paychecks, think tank finds

At the same time, Medicare Part B does not cover dental, hearing or vision benefits. Retirees who want that protection must buy Medicare Advantage coverage, add private insurance or pay cash. “Medicare treats dental, vision, and hearing insurance like extras or add-ons for American seniors, but access to these services is essential,” Benton said, warning that lack of affordable coverage can undermine both finances and quality of life over time.

The forecast comes on the heels of the latest Consumer Price Index release from the Bureau of Labor Statistics, which showed headline inflation running at 2.4% year over year in January and core inflation at 2.5%. That softer reading led some economists to declare progress on inflation.

“This is great news on inflation,” Heather Long, chief economist at Navy Federal Credit Union told CNBC, noting that key items such as food, gas and rent are easing.

Still, Friday's CPI read, which was delayed due to the partial government shutdown, only adds to a mixed economic picture for the Federal Reserve. Jobs data from the BLS this week exceeded expectations, which means the case for a rate cut in upcoming Fed meetings remains alive and well.

"Looking forward, we would expect this environment of relatively strong growth, juiced by higher tax refunds from the OBBB, an improving job market and a continued trend of lower inflation will keep interest rates in a steady range as we await Kevin Warsh's fresh perspective at the Fed, when he takes over in May," said John Kerschner, global head of Securitized Products and portfolio manager at Janus Henderson Investors.