Social Security’s 2027 COLA Projection Comes With a Blunt Warning

Even though we’re not even halfway through 2026, a lot of seniors on Social Security are already thinking about 2027. Specifically, they’re wondering what cost-of-living adjustment (COLA) to expect in the new year.

Many Social Security retirees were disappointed with this year’s 2.8% COLA. And in that regard, there’s good news and bad news for 2027.

So far, the nonpartisan Senior Citizens League estimates that next year’s Social Security COLA will be 2.8% — the same raise as in 2026. But independent Social Security analyst Mary Johnson thinks differently.

Following March’s Consumer Price Index, Johnson raised her 2027 COLA estimate to 3.2%. And that number might sit better with retirees.

But a 3.2% Social Security COLA isn’t necessarily a good thing. Here’s why.

Higher COLAs mean higher costs

Social Security COLAs are tied directly to inflation. What this means is that any time there’s a larger COLA, it’s an indication that prices are trending higher.

To put it another way, if Social Security recipients end up with a 3.2% COLA in 2026 — or an even larger raise than that — it will come at the cost of higher prices at the pump, in stores, and just about everywhere.

COLAs are designed to help Social Security beneficiaries keep up with inflation. But they’re not supposed to help benefits beat inflation.

Worse yet, COLAs are based on trailing inflation data. So if inflation picks up after a COLA is announced, seniors on Social Security can lose out.

That seems to be what’s happening this year. Social Security benefits rose 2.8% in January. But March data shows that inflation is already running higher. As such, Social Security recipients may end up losing buying power this year if inflation doesn’t start to cool off soon.

Don’t bank on a giant COLA to improve your finances

You may be hoping for a large Social Security COLA in 2027. But even if next year’s raise is larger than this year’s, it may not do your finances a whole lot of good.

If you’ve been having a hard time making ends meet, a much better bet is to generate extra income on your own. You can do that by getting a part-time job, consulting in your former field, joining the gig economy, or using some of your savings to invest in assets that pay regularly (think dividend stocks and bonds).

Even if Social Security benefits get a 3.2% COLA in 2027, the average recipient will only see their monthly checks rise by about $66. And that doesn’t account for an increase in Medicare Part B, which comes out of Social Security for dual enrollees.

Working a day or two a week might put a lot more extra money in your pocket than $66 per month. The same holds true for the right investments.

So rather than hope a larger COLA comes through in 2027, a smarter idea is to take active steps to boost your retirement income. That’s also a good thing to do in case next year’s Social Security raise ends up being smaller or starts lagging inflation early in the year such as what seems to be happening right now.