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(Rix Pix Photography / Shutterstock.com)
Quick Read
Social Security benefits only got a 2.8% COLA in 2026.
Current estimates are calling for the same raise in 2027.
Social Security COLAs have a long history of failing to keep up with inflation.
Have You read The New Report Shaking Up Retirement Plans? Americans are answering three questions and many are realizing they can retire earlier than expected.
For millions of retirees on Social Security, the program’s annual cost-of-living adjustments, or COLAs, can be a true lifeline. Without COLAs, Social Security benefits would be virtually guaranteed to fall behind inflation.
In 2026, Social Security benefits got a 2.8% COLA. But current projections are pointing to the same COLA for 2027. And that’s something retirees may not be thrilled with.
Small COLAs are hurting retirees
Social Security COLAs are based on third quarter inflation data. For this reason, at this point during the year, any estimate of 2027’s COLA is just that — an estimate.
Still, the nonpartisan Senior Citizens League projects that Social Security benefits will only rise 2.8% in 2027. Considering the number of beneficiaries who are struggling to cover their costs right now, that’s a problem.
But that’s not the main issue. The true problem stems from a flaw in the way Social Security COLAs are determined.
Social Security COLAs are based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The problem is that the CPI-W reflects the spending patterns of working Americans — not retirees.
Retirees on Social Security tend to spend a larger share of their income on healthcare and housing — two categories that have seen persistent increases in recent years. As a result, even during periods when COLAs are more generous, Social Security recipients can still find behind on their expenses overall.
A major change is needed
One big misconception about Social Security COLAs is that they’re designed to help retirees gain buying power. The best they can do is help seniors maintain their buying power as inflation drives costs up.
But the current method of calculating COLAs doesn’t even really allow for that. For this reason, advocates have been pushing to tie the COLA formula to a senior-specific index instead of the CPI-W — one that puts more weight on housing, healthcare, and other expenses that tend to eat up a large share of retirees’ income.
For now, however, the CPI-W remains the index COLAs are measured by. So retirees may be in for yet another year of struggle in 2027.
That doesn’t mean seniors should feel helpless, though. Retirees can still take steps to improve their finances in the near term.
How to boost your finances
If you’re worried that a small Social Security COLA in 2027 will be a problem for you, here are some key steps to start taking now:
Find a part-time job, whether it’s one with preset hours, consulting, or gig work. A small paycheck could boost your income a lot more than a Social Security COLA.
Get onto a strict budget and aim to cut expenses. Reducing even a few bills could help a lot.
Look into relocating to a cheaper part of the U.S. If you can spend less on a whole, your Social Security benefits should go a lot further.
These steps may be helpful. But they don’t totally solve the problem.
It will probably take a big change to the COLA formula to make a meaningful difference for Social Security recipients in the long term. But until that happens, it’s best to take matters into your own hands.
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