Quick Read
Social Security retirees are on track for the highest COLA in four years.
Retirees could see a raise topping 4% if inflation keeps trending high.
There is a catch, and the anticipated raise may not pan out.
A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
Social Security retirees could be in for a major change to their Social Security benefits in 2027. The upcoming cost-of-living adjustment (COLA) retirees are on track for next year could be the largest in four years, and could be the fourth largest overall in the last 36 years.
While a big raise may seem like great news, though, there is a catch. Here’s what seniors need to know about their projected benefits increase in the coming year, along with a big caveat they should watch out for.
Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
Experts say retirees are on track for a huge raise, and the math checks out
While the official 2027 COLA numbers won’t be released until October, there are plenty of projections from experts about what’s coming. In fact, Mary Johnson, an independent Social Security and Medicare analyst, is estimating that retirees are looking at a 4.2% benefits increase. This is a significant change from earlier this year, when Johnson predicted just a 1.7% increase. The Senior Citizens League, which is a senior advocacy group, is also predicting a 3.9% COLA, up from its earlier 2.8% projections.
There is a solid foundation for these projections. The cost-of-living adjustment is calculated based on year-over-year changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-W is released monthly by the Bureau of Labor Statistics. While the COLA formula takes into account data from the third quarter of the year, which remains unavailable until October, inflation numbers have already been published for January through April, and here’s what the numbers look like so far for 2025 vs. 2026.
January
February
March
April
2025
311.172
312.46
313.25
314.243
2026
317.942
319.422
323.5
326.541
Percent Change
2.18%
2.23%
3.27%
3.91%
Inflation is clearly trending higher. In fact, it reached the worst level in three years. And there’s every reason to believe that this trend will continue, leading to a COLA that’s significantly above average.
Story Continues
How will the 2027 COLA compare?
If the math and the experts are right, the 3.9% to 4.2% COLA is going to be the biggest raise in four years. Here’s what the Social Security cost-of-living adjustments have looked like in recent years, according to the Social Security Administration.
2026: 2.8%
2025: 2.5%
2024: 3.2%
2023: 8.7%
2022: 5.9%
And if the 4.2% projection is correct, the 2027 COLA will also be the fourth largest in 36 years, topped only by a 5.8% increase in 2009, and the 5.9% and 8.7% increases in the aftermath of the pandemic.
What’s the catch?
Drozd Irina / Shutterstock.com
While retirees seem like they’re on track for a huge benefit increase, there’s one big catch: These are early projections and may not pan out.
Inflation is surging right now, and experts anticipate these trends will continue. However, there’s no guarantee that will happen, and none of these current numbers are part of the official COLA calculation. Only the third quarter data matters, so the actual numbers that count are the CPI-W data for July, August, and September.
It is entirely possible that economic conditions will change before then. In fact, a few key events could lead to a major trend reversal, including:
President Trump changing course on his tariff policy
A satisfactory resolution to the Iran war that causes oil to become more freely available and affordable
The Federal Reserve raising interest rates.
While any one of those events alone may not be enough to substantially reverse the inflation trends, a combination of the three could result in the COLA coming in unexpectedly low. Absent that, though, retirees are probably looking at a big benefits bump that gives them far more money in their checks. Of course, they’ll also be coping with high inflation, so they will need to manage the effects of that in their other retirement savings accounts. A financial advisor can help if necessary, as retirees cope with these unusual economic conditions.
Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.
