If someone were to offer you a smaller raise at work versus a larger one, which one would you be happier to accept? Clearly, most folks would take the larger bump to their paychecks.
But in the context of Social Security, a larger cost-of-living adjustment (COLA) isn't necessarily more optimal than a smaller one. And that's a key thing to keep in mind as we gear up for an official 2027 Social Security COLA announcement.
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The 2027 COLA forecast just moved higher
Social Security COLAs are based on third quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). At this point, we have data for July and August, but September data won't be released until Oct. 14.
Following August's report, the Senior Citizens League, an advocacy group, reduced its COLA projection from 3.6% to 3.5%. But other sources moved their projection higher.
Independent Social Security analyst Mary Johnson estimated in August that the 2027 Social Security COLA would be 3.4%. Earlier this month, she raised that number slightly to 3.5%.
AARP, meanwhile, increased its 2027 COLA forecast from 3.5% to 3.6%. Any of these increases would constitute a larger raise than the 2.8% COLA Social Security recipients got at the start of 2026.
A larger Social Security COLA isn't automatically good news
If you've been tracking the 2027 COLA, you may be relieved to see that the forecast generally trended upward in September. But you don't necessarily want to hope for a COLA that's too much larger.
Since COLAs are tied to inflation, the only way for a large raise to come through is for inflation to surge. So if you don't like the idea of seeing your expenses increase a lot in the coming weeks, then you shouldn't hope for a much larger 2027 COLA. It's that simple.
In fact, one big misconception about Social Security COLAs is that they're meant to be a financial game changer. All those raises are really supposed to do is match inflation, not beat it. If you're having a hard time paying your bills now, a giant COLA in 2027 won't necessarily change things. And if that's the case, your best bet is to take active steps to improve your situation, like getting a part-time job or downsizing to shed costs.
The Social Security Administration should be announcing an official 2027 COLA on Oct. 14. But if the final number isn't so much larger than 3.6%, don't be too disappointed. A larger COLA than that could upend your finances in the near term, so a modest raise may ultimately be best.
