Latest News
2027 COLA Watch: Would a Hefty Upswing Improve Your Standard of Living? - The Motley Fool
Most “experts” these days are producing giddy proclamations about what could be a substantial increase in the annual Social Security cost-of-living adjustment (COLA) that beneficiaries will see in their January 2027 deposits. Estimates as high as 3.9% are in the air, as inflation continues to ramp up during the IRAN conflict’s disruption of energy costs. Remember, though, that the actual COLA calculation is not produced until October, and what happens outside of July through September may or may not bear on the final adjustment. This is, of course, because Social Security’s Cost of Living Adjustment (COLA) is a snapshot comparison of Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) measurements from the previous year’s third quarter to the same period in the current year.
Even more important to remember, though, is that the annual adjustment trails actual inflation; it is intended to serve as a mechanism for beneficiaries to “catch up” to rising costs. That means the cost increases that contributed to the COLA adjustment have already occurred. A high COLA means additional benefit dollars, but increased spending has already become the norm. It’s an unfortunate conundrum, as explained in a recent post by The Motley Fool’s Kailey Hagen, CFP. Check it out here…