There are many people who end up collecting Social Security for 10 years, 20 years, or longer. And for seniors in that boat, Social Security's annual cost-of-living adjustments, or COLAs, are a big deal.

The purpose of Social Security COLAs is to help benefits keep up with inflation. If benefits were to stay the same for decades, Social Security recipients would be guaranteed to lose out on buying power. Instead, benefits are automatically eligible for an increase each year that's directly tied to inflation.

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At this point, you may be gearing up for 2027's Social Security COLA. Here are three things you need to know about it.

1. It's based on data from July, August, and September

If you dig around on the internet, you'll probably come across a few different projections for next year's Social Security COLA. But one thing you don't want to do is get hung up on any given number.

Social Security COLAs are based on third-quarter inflation data. This means next year's raise can't be calculated until data comes in from July, August, and September.

Any number you see posted right now is speculation, so don't start planning your 2027 budget around a specific Social Security raise. Instead, map out your expenses based on your current check. That way, any extra money that hits will make your financial life that much easier.

2. It may not hold up well to inflation

The whole point of Social Security COLAs is to offer inflation protection. But there's data showing that COLAs tend to fail in that regard.

The Senior Citizens League, an advocacy group, says Social Security recipients have lost an estimated 13.7% of their buying power since 2016. And the reason is that the COLAs that came through during that time did not keep up with real-world inflation for seniors.

A big part of the problem is that COLAs are based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But the CPI-W tracks the spending habits of working folks, not retirees. And that disconnect has been costing Social Security recipients for years.

Advocates have suggested basing Social Security COLAs on a senior-specific inflation index. But as of now, the CPI-W remains the standard, which means next year's COLA may not hold up well to inflation, no matter what the actual number is.

3. It should be announced in mid-October, barring a major snag

If you're eager to know what your upcoming Social Security COLA will be, you'll have to sit tight until Oct. 14. That's when September's CPI-W data should become available. But it's possible that the announcement could be delayed.

Last year, a government shutdown caused a delay in producing CPI-W data, which caused the Social Security Administration to have to postpone its COLA announcement. If there's similar upheaval this time around, official word on a COLA may not come in on schedule.

A big change could be coming to your benefits

All told, it's looking like next year's Social Security COLA could be pretty substantial. Will it be the largest COLA benefits that we have ever seen? That's unlikely. But is there a good chance next year's COLA will well outpace 2026's 2.8% raise? That's a resounding yes.

Either way, it's important to have realistic expectations as to what Social Security COLAs can and can't do. They can give benefits a boost to match inflation, but they can't be expected to improve your financial picture overall. If you're struggling to make ends meet and don't have much retirement savings to fall back on, exploring part-time work could be a reasonable way to boost your income without having to slash your spending to an uncomfortable degree.