Social Security’s 2027 COLA Is 3.6%. If This Happens, the Next Raise Could Be Even Bigger

When the Social Security Administration announced in late 2025 that benefits would receive a 2.8% cost-of-living adjustment, or COLA, in 2026, many seniors were disappointed. And that sentiment was understandable. Prices were already quite high in late 2025, so it's natural that Social Security recipients wanted a larger increase to their benefits.

Thankfully, the 2027 COLA is a big improvement over this year's 2.8% raise. Benefits will get a 3.6% increase in January, which will hopefully help seniors better keep up with their expenses.

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But as generous as a 3.6% COLA sounds, the 2028 COLA could be even higher. If that happens, though, it won't necessarily be for a good reason.

The problem with larger COLAs

Many Social Security recipients are wired to think that a larger COLA is a better COLA. But it's important to remember that COLAs are tied directly to inflation -- specifically, third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers.

When COLAs are large, it means inflation has been surging. This year, for example, consumers across all age groups have grappled with higher prices at gas stations, supermarkets, and other retail locations. Inflation began surging in the wake of the Middle East conflict, and it hasn't slowed down much since.

The 3.6% COLA that's set to arrive in January is a way to reimburse Social Security recipients, so to speak, for the higher costs they've faced over the past few months. And if inflation continues to soar in 2027, Social Security's 2028 COLA could come in higher than 3.6%.

However, wishing for an even larger COLA in 2028 doesn't necessarily make sense. If the 2028 COLA is more generous, it will come at the expense of massive price increases in 2027, which could strain seniors' budgets and leave them struggling despite seeing a 3.6% increase in their benefits.

Modest COLAs may actually be best

While most Social Security recipients probably wish for a large COLA each year, hoping for moderate raises actually makes more sense. Moderate COLAs mean moderate inflation, which can be easier on retirees' budgets.

The whole system of calculating COLAs also underscores the importance of having retirement income outside of Social Security. While those raises might help seniors keep up with inflation to some degree, ultimately, the right investment portfolio can often do an even better job of that. In fact, stocks have a long history of beating inflation, so seniors who hold some in their portfolios may fare better during periods when costs continue to rise.

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