Will Social Security's 2027 COLA Be Larger or Smaller Than 2026's? Here's What We Know So Far.

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, have only 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 every 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 only just gotten started.

There are some initial estimates of 2027's Social Security COLA. But you may not like what you hear.

What the experts say so far

In 2026, Social Security benefits got a 2.8% COLA. Based on recent inflation readings, the Senior Citizen 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 way too soon 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 upcoming COLA. But ultimately, it's too early in the year to land on a 2027 COLA with any degree of certainty.

Don't expect great things

Even if next year's Social Security COLA comes in higher than the current 2.5% projection, it's important to have realistic expectations. You may want to assume that the adjustment won't do much, or anything, to improve your finances.

First, Social Security COLAs aren't actually designed to help seniors get ahead financially. The only thing they're supposed to do is help beneficiaries keep up with inflation. But because of a big flaw in the way they're calculated, they often fail in that regard.

Social Security COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. But the expenses Social Security recipients commonly face tend to be very different from the expenses working folks face.

Healthcare is a prime example. Retirees on Social Security tend to spend a large chunk of their income on healthcare. But healthcare inflation has been outpacing broad inflation, rendering COLAs less effective.

For this reason, rather than fixate on what 2027's Social Security COLA will be, try to think of different ways to improve your retirement finances. That could mean going back to work in some capacity (which you're allowed to do while collecting benefits) or reducing your monthly expenses.

As we get closer to an official 2027 COLA announcement, which is supposed to come in October, the estimates you see may be more accurate. But remember, if you want 2027 to be a healthier year for you financially, the time to start making personal changes is now.

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