Early 2027 COLA Forecast: Small Raise May Leave Retirees Struggling

Social Security recipients got a 2.8% cost-of-living adjustment (COLA) to start off 2026. That raise boosted the average retirement benefit by roughly $56, a small but needed senior benefit increase.

Social Security recipients who are enrolled in Medicare pay their Part B premiums out of their monthly benefits. The standard Medicare Part B premium rose from $185 last year to $202.90 this year. When we account for that almost $18 increase, the typical dual Social Security and Medicare enrollee may have only seen their benefit rise by $38 a month.

Initial COLA forecasts for 2027 don't paint a much rosier picture, though.

What initial 2027 COLA projections look like

Social Security COLAs are based on third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration typically makes an official COLA announcement in October each year, once September CPI-W data becomes available.

At this stage of the year, it's tricky to predict with certainty what next year's Social Security COLA will look like. But here's what some experts are saying:

• The Senior Citizens League projects a 2.8% COLA for 2027.
• Independent Social Security analyst Mary Johnson predicts a 1.2% COLA for 2027.
• The Congressional Budget Office projects a 3.1% COLA for 2027.

If inflation levels pick up between now and September, next year's COLA forecast could rise. If inflation slows down, that number could drop.

The problem with COLA calculations

Many retirees get most of their income from Social Security and depend heavily on COLAs to keep up with rising costs. The problem is that beneficiaries tend to lose out on buying power due to a flaw in the way those COLAs are calculated.

The Senior Citizens League found that Social Security recipients lost about 20% of their buying power between 2010 and 2024. And a big reason is that the CPI-W, which COLAs are based on, does not accurately reflect the costs Social Security recipients tend to incur.

Social Security recipients tend to spend a large portion of their income on healthcare, which is not heavily weighted in the CPI-W. But healthcare costs have been outpacing broad inflation for years, leaving seniors scrambling to catch up.

The National Bureau of Economic Research sounded alarms about this problem back in 2009, noting that the CPI-W does not accurately reflect the spending patterns of retirees for two reasons.

First, retirees typically have higher medical expenses, and healthcare costs tend to rise faster than the cost of other goods. Secondly, even if medical costs rose on par with other goods, retirees would still need to dedicate a larger share of their income to healthcare expenses as they age.

To put it another way, Social Security COLAs don't tend to keep pace with what retirees actually spend. Advocates, including the Senior Citizens League, have suggested that lawmakers move to use the Consumer Price Index for the Elderly (CPI-E) to calculate COLAs, since it better reflects the costs retirees tend to face.

In October of 2025, the Boosting Benefits and COLAs for Seniors Act was introduced to change the basis of COLA calculations to the CPI-E. The bill has not yet made it past the introduction stage.

How to brace for a small 2027 COLA

If you've been struggling to keep up with your expenses based on recent Social Security COLAs, unfortunately, 2027's raise may not be notably different. Now's the time to plan for a small or ineffective COLA so you can better manage your bills.

First, review your spending and set up a budget that prioritizes your essential costs. You may find that there are small but meaningful spending cuts you can make.

Next, see if you have options for generating income on top of Social Security. That could mean working part-time or, if you have the space, renting out a room in your home.

If you're not yet retired, you have even more opportunities to prepare for Social Security COLAs that may not be all that helpful. Build as much savings as you can each year by making steady contributions to an IRA or 401(k), and invest your money strategically so it's able to grow.

You can also look at delaying your Social Security claim for larger monthly checks. Each year you hold off on filing for benefits past full retirement age boosts your Social Security checks by 8%, up until age 70.

The more money you get from Social Security, the easier it may be to keep up with your spending. Plus, the larger your benefits are, the more money COLAs should put in your pocket.

Bottom line

Next year's Social Security COLA may be similar to 2026's, but it's too soon to tell. Rather than spend time worrying about the actual number, focus on steps you can take to improve your financial situation.

If you're retired, that means minding your spending and finding creative ways to boost your non-Social Security income. If you're still working, it means reading up on Social Security, Medicare, and investing strategies to come up with a solid plan. It also means saving consistently so you're able to build a nest egg for a stress-free retirement that supplements your Social Security benefits once you start collecting them.

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