Social Security’s Historic 2027 COLA: Here’s Everything You Need to Know

0Image source: Getty Images.Social Security’s highly anticipated 2027 cost-of-living adjustment (COLA) reveal is less than 24 hours away.Key PointsSocial Security’s COLA is a near-annual raise that combats inflation (rising prices).

One of the largest raises in 35 years is expected to be announced tomorrow, Oct. 14.

Several factors are boosting the prevailing inflation rate and, thus, Social Security’s 2027 COLA — but that’s not necessarily good news for beneficiaries.

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Few events are more anticipated by Social Security's more than 71 million traditional beneficiaries — retired workers, workers with disabilities, and survivors of deceased workers — than the annual cost-of-living adjustment (COLA) reveal. The wait is nearly over, with beneficiaries soon learning how much they'll receive each month in 2027.

Here's everything you need to know ahead of this historic announcement.

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The COLA you're always hearing and reading about is a near-annual "raise" passed on to beneficiaries to combat inflation (rising prices) and a loss of Social Security income purchasing power.

Hypothetically, let's say that a broad basket containing hundreds of goods and services that seniors regularly purchase increases in cost by 3% from one year to the next. If Social Security benefits didn't increase by the same percentage (3%), seniors wouldn't be able to purchase the same amount of goods and services — i.e., their buying power would decline.

As long as inflation occurs and prices rise from the previous year, beneficiaries will receive a cost-of-living adjustment for the following year.

The U.S. Bureau of Labor Statistics (BLS) is set to publish the September inflation report at 08:30 a.m. ET on Wednesday, Oct. 14. This report provides the last data point needed to calculate Social Security's 2027 raise.

The Social Security Administration typically announces the program's annual COLA anywhere from five to 15 minutes after the BLS releases the September inflation data.

One of the weird quirks about Social Security's COLA calculation is that it only factors in the trailing 12-month readings of three end months (July, August, and September) for the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The BLS reports the CPI-W monthly, and its trailing 12-month readings can be helpful in determining whether prices are rising or falling. However, only trailing 12-month CPI-W readings from the third quarter are used to calculate Social Security's COLA. Since the September inflation report is often released during the second week of October, the COLA announcement can't be made before then.

For those of you who are impatient and don't want to wait up to 15 minutes for the Social Security Administration to announce the 2027 COLA, you can easily calculate it.

First, you'll need the CPI-W readings from July through September last year (2025) and the comparable CPI-W readings from the third quarter of this year (2026). Add up the CPI-W readings from 2025 and divide by 3 to get the average third-quarter CPI-W reading from last year. Repeat this step for 2026's data to get the average third-quarter CPI-W reading for the current year.

The year-over-year percentage difference (from 2025 to 2026) in average third-quarter CPI-W readings, rounded to the nearest tenth of a percent, equates to next year's cost-of-living adjustment.

Although Social Security's 2027 COLA hasn't been revealed, several independent estimates have been made.

Following the August inflation report, The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, lowered its forecast by a tenth of a percent to 3.5%. Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson upped her 2027 COLA projection by a tenth of a percent to 3.5%.

Based on average monthly payouts from Social Security's August snapshot, a 3.5% COLA would add about $73 per month to the average retired worker's benefit. By comparison, the average worker with a disability and the average survivor beneficiary would each see their monthly payout climb by approximately $57 in 2027.

Since the CPI-W became Social Security's inflation-measuring yardstick in 1975, a 3.5% COLA isn't anywhere close to the largest. But when the lens is narrowed to just the last 35 years, a 3.5% COLA, if independent estimates prove accurate, would represent a tie for the sixth-largest raise. Only increases of 4.2% (2006), 5.8% (2009), 3.6% (2012), 5.9% (2022), and 8.7% (2023) would be larger.

Additionally, it would mark the sixth consecutive year in which benefits have grown by at least 2.5%. The last time that happened was three decades ago, from 1988 through 1997.

Given that Social Security's near-annual raise is designed to offset inflation, one of the largest COLAs of the last 35 years means consumer prices are rising at an above-average rate.

While a modest level of inflation is expected in an expanding economy, several factors have lit a fire under the prevailing inflation rate in 2026, including (but not limited to):

President Donald Trump's tariff and trade policy: Adding duties to imported unfinished goods, such as steel, risks increasing domestic production costs. Manufacturers typically pass these higher costs on to retailers or directly to consumers.

The Iran war: Shortly after President Trump approved military action against Iran, the latter closed the Strait of Hormuz to most commercial vessels, stymying the flow of a fifth of the world's crude oil supply. Fuel prices have soared, and the inflationary effects of the Iran war are starting to be felt in the broader U.S. economy.

The AI infrastructure build-out: The insatiable demand for artificial intelligence (AI) hardware has been a boon for AI stocks, but it's terrible for consumers. Persistent supply shortages for memory and processing chips are raising prices for tech devices.

While an outsize increase in Social Security payouts is bound to put a smile on the faces of most beneficiaries next year, it doesn't mean beneficiaries are getting ahead. In fact, TSCL analyses have shown quite the opposite.

TSCL compared cumulative COLAs from January 2000 to February 2023 to the price increases seniors faced for dozens of popular goods and services over the same timeline. According to TSCL, the buying power of a Social Security dollar plunged 36%. A more recent analysis from TSCL found a 20% loss of purchasing power from 2010 to 2024.

Though the CPI-W is a vast improvement over Congress arbitrarily assigning COLAs with no rhyme or reason between 1950 and 1974, it's not without its flaws. It's an inflation index that tracks the cost pressures faced by "urban wage earners and clerical workers," who, in many instances, are working-age Americans not currently receiving a Social Security benefit. By comparison, 86% of traditional Social Security beneficiaries are 62 and older, as of December 2025.

In short, the CPI-W doesn't do the best job of accounting for the inflationary pressures Social Security beneficiaries face, resulting in a loss of buying power over time.

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