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COLA Watch – 2027 - The Motley Fool; theglobeandmail.com
Yes, the official calculation of the 2027 Social Security cost-of-living adjustment is still about eight months away. But since it’s such a popular topic for pundits to discuss, we’re already seeing forecasts of what beneficiaries could see in their January 2027 payments. This one, published by The Motley Fool staff on theglobeandmail.com site, references forecasts ranging from 2.8% to 3.1%, although they acknowledge that “… there’s no way to get a 100% accurate idea of where the 2027 adjustment might land just yet.”
We’ll be reposting updates on the COLA issue periodically throughout the year, but for now, this post will start your thinking about what could happen next year.
The COLA Calculation Process Today
For those new to Social Security and in need of a quick update on how the process works, here’s a thumbnail perspective. The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a Bureau of Labor Statistics measure that tracks changes in the cost of goods and services purchased by urban wage earners and clerical workers. Although CPI-W is calculated monthly, Social Security only uses the figures from July, August, and September to determine the next year’s adjustment.
The agency averages those three months’ data and compares it to the same period from the previous year. If the number is higher, the percentage increase becomes the new COLA. If the current year’s figure is lower, the COLA is set at zero, since benefits cannot decrease. This has happened three times in recent memory: 2010, 2011, and 2016.