The 2027 Social Security cost-of-living adjustment (COLA) could be 3.8%. How is it determined?
Editorial staff, J.P. Morgan Wealth Management
- The Social Security cost-of-living adjustment (COLA) helps retirement benefits keep pace with inflation.
- The COLA is measured using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As a percentage increase, the COLA compares two third-quarter averages: the CPI-W this year and the CPI-W last year.
- In 2027, the average Social Security check is estimated to increase by about $79 per month, according to The Senior Citizens League. That would equate to a COLA of 3.8%. For 2026, the COLA was 2.8%.
- The COLA is typically announced in the fall and affects Social Security checks starting in January of the new year.
In case you missed it, your monthly Social Security check can change slightly year to year. That's because of the annual cost-of-living adjustment (COLA), which is a percentage change to your benefits so that they keep pace with inflation. The Social Security Administration (SSA) calculates the next year’s COLA using third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The SSA typically releases the COLA for the upcoming year in the fall. For 2027, the COLA is estimated to be 3.8%, according to The Senior Citizens League. The Senior Citizens League is a nonpartisan senior group that advocates on behalf of older adults. The League releases estimates for COLA every year.
But what does that percentage actually mean for your monthly Social Security benefits check? If you're a retired worker who receives the average monthly amount of $2,084.40, you can expect your check to rise by about $79 per month in 2027. In this article, we'll walk you through the math so you can estimate what you’ll see in your own Social Security checks next year.
What is the COLA, and how is it calculated?
Typically announced in the fall, the COLA is a percentage that is designed to combat inflation's impact on certain Social Security benefits. Sometimes no COLA is announced, but when one is, it goes into effect in January of the new year.
The SSA calculates the COLA using third-quarter data (measured from July through September) from the CPI-W from the Bureau of Labor Statistics (BLS).
Specifically, the SSA compares the average third-quarter CPI-W of the current year to the average third-quarter CPI-W of the previous year. If the current year's third-quarter CPI-W is higher than the previous year's third-quarter CPI-W, then the COLA will rise by that percentage. If it's not, then the COLA will be zero. (It's never negative.)
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How COLA affects your Social Security benefits
Here’s an example of how the COLA can work: Let’s say next year’s COLA is 3.8%. If you're a retired worker receiving $2,000 per month in benefits, your gross amount would rise by approximately $76 per month (for a total of $2,076). That’s because 3.8% of $2,000 is $76.
Note that the change is to your gross benefit. The amount you receive – your net benefit – will be lower if you have any deductions, like Medicare Part B premiums or federal and/or state tax withholding.
The COLA affects more than retirement benefits. Surviving spouses of retired workers are affected by the COLA, as are Supplemental Security Income (SSI) beneficiaries.
Your 2027 Social Security COLA notice will be available online or by mail around November 2026. (For the former, you’ll need to log in to your "my Social Security" account).
The bottom line
The COLA is an annual percentage adjustment that affects the amount of your monthly Social Security benefits. It's designed to help your benefits maintain their purchasing power over time.
To calculate the COLA every year, the SSA uses the CPI W, an inflation index produced by the BLS. The COLA is equal to the percentage change between the current year's third-quarter average and the previous year's third-quarter average. That said, the COLA is never negative, and it can be 0% or higher.
Log in to your online "my Social Security” account to monitor when the new COLA is released and how it will impact your benefit amount in the new year. Then use your new net amount to update your budget. (Note, however, that the COLA reflects inflation broadly, so its impact on monthly budgets will vary, especially if recipients elect to have Medicare Part B premiums deducted from their Social Security payments.)
Finally, watch out for scams that mention COLA increases. Always verify that the message you're receiving is truly from the Social Security Administration (SSA).
Frequently asked questions about the Social Security COLA
In the context of Social Security, the COLA is a cost-of-living adjustment that changes each year. The SSA calculates the COLA by comparing the average third-quarter (July through September) CPI-W for the current year to the average third-quarter CPI-W for the previous year. The COLA then represents the CPI-W's change from one year to the next. It can be zero or positive, but never negative.
The SSA typically announces the COLA for the upcoming year every fall. Your updated benefit amount will be sent starting in January of the new year.
You'll typically be able to view your COLA notice and updated Social Security benefit amount in your online "my Social Security" account in the fall. Remember, what you actually take home is the net amount, which is the gross amount minus any deductions, like any Medicare Part B premiums.
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Editorial staff, J.P. Morgan Wealth Management
