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What’s Happening on the 2027 COLA Front? - finance.yahoo.com
Proclamations about what could be a substantial increase in the annual Social Security cost-of-living adjustment (COLA) that beneficiaries could see in their January 2027 deposits are coming in fast as inflation grows amid oil price uncertainties. Estimates as high as 3.9% are in the air, but remembe 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.
Technical explanations aside, there are three key COLA-related factors that many folks are folding into their planning for next year’s finances. The Motley Fool’s Selena Maranjian, in a post on finance.yahoo.com, explains these factors. Check her post out here…
When thinking about future COLAs, it’s important to remember 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.