Millions of Americans collect monthly retirement benefits from Social Security. And for many recipients, those benefits constitute the bulk of their retirement income.
Some retirees, in fact, only have Social Security to cover their bills. For this reason, Social Security’s annual cost-of-living adjustments, or COLAs, are extremely important.
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Social Security benefits are eligible for COLAs each year; these are calculated and applied automatically based on inflation. This is very different from the way things worked decades ago, when lawmakers actually had to vote on whether to boost Social Security benefits.
For retirees who rely heavily on Social Security, annual COLAs are extremely important. And if you’re on Social Security, you may be wondering what your 2027 COLA will look like — even though 2026 has just begun.
There are some initial estimates of the 2027 Social Security COLA. But you might not like what you hear.
In 2026, Social Security benefits got a COLA of 2.8%. Based on recent inflation readings, the Senior Citizens League, an advocacy group, projects that Social Security benefits will get a 2.5% COLA in 2027.
Obviously, a smaller COLA in the new year would be a big disappointment. But it’s too early to panic over a stingy COLA in 2027.
Social Security COLAs are based on inflation readings from the months of July, August and September. Inflation readings leading up to those months can give some clues as to what to expect from the next COLA. But ultimately, it’s still too early in the year to land on COLA 2027 with any degree of certainty.
Even if next year’s Social Security COLA comes in higher than the current projection of 2.5%, it’s important to have realistic expectations. You may want to assume that the adjustment won’t do much, if anything, to improve your finances.
First, Social Security COLAs are not actually designed to help seniors get ahead financially. The only thing they are supposed to do is help the beneficiaries keep up with inflation. But due to a major flaw in the way they are calculated, they often fall short in that regard.
Social Security COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. But the costs that Social Security recipients commonly face tend to be very different from the costs that working people face.