3 Reasons the 2027 COLA Forecast Should Change How You Plan for Social Security Right Now

Some people are bird-watchers and some people are Social Security cost-of-living adjustment (COLA) estimate watchers. (Of course, some folks are both!) If you've been keeping an eye on estimates of 2027's COLA, which will be announced in October, you've probably seen it change.

Many look to the Senior Citizens League (TSCL) for estimates, and while the TSCL projected a COLA of 2.8% earlier in 2026, it upped that figure to 3.3% and, more recently, to 3.9%.

Here's a look at how the 3.9% projection might change how you plan for Social Security.

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1. You can count on more income in retirement

First, and most obvious, a 3.9% Social Security COLA for 2027 means you can expect bigger Social Security benefit checks in 2027. Any increase in retirement income is worth celebrating. Here's what a 3.9% bump will look like:

It's not nothing, but it's also not a massive increase. Also, don't think of it as gravy, because with many costs rising in price sharply, it may not even cover all the higher prices you'll be paying with inflation. If you do a lot of driving, for example, you may be paying much more in higher gas costs than you got in your Social Security increase.

2. That projection could change

Know, too, that the projection is just that -- a projection. It might well change again -- and again -- before the big, official announcement in October. So go ahead and keep it in mind as you plan, but don't count on it as the final number.

3. Even a bigger increase might not be enough

As you plan and save and invest for retirement, you're surely counting on Social Security to provide a meaningful chunk of your retirement income. For many people, it will provide half or more of that income.

It's a glorious thing that Social Security benefits get COLAs almost every year, but know that every increase is probably not big enough. That's because Social Security COLAs are based on a government inflation measure that tracks common spending of workers, not retirees. There's another, arguably more appropriate measure to use -- the Consumer Price Index for the Elderly -- which better reflects senior spending. For instance, it weights healthcare expenses more heavily.

Indeed, in a 2024 report, TSCL noted:

The reality is that COLAs have become less and less likely to match inflation over time. In the 1990s and 2000s, 60% of COLAs beat inflation. In the 2010s, only 40% did. Through the 2020s so far, only one COLA out of five (2023; 8.7%) has done so.

There's a big threat to Social Security looming

Meanwhile, there's an even bigger problem regarding your future benefits. As you might know, while taking in taxes on workers' earnings and paying benefits to retirees, the Social Security program ran a surplus for many years. But people are living longer and many are retiring earlier, so if nothing is done to shore up the program, Social Security's trust funds surplus will run out around 2032, which will mean benefits shrink by about 28%.

That's a big deal, and it can throw a hefty wrench into your future plans. The good news is that there are plenty of ways to strengthen Social Security. But Congress has to act on one or more of them, which isn't guaranteed to happen.

What to do

So while it's always good to hope for the best, which would mean a big COLA increase for 2027 and the strengthening of Social Security, it's smart to not count on that. Instead, plan for the worst. As you plan for retirement, expect less from Social Security and build up other retirement income streams, such as from dividend-paying stocks, annuities, your retirement accounts, interest-bearing accounts, and/or rents from tenants, among other possibilities.

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