Hoping for a Larger Social Security COLA in 2027 Could Backfire

Millions of older Americans rely on Social Security to cover their costs. And thankfully, Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA.

Without COLAs, Social Security benefits would not be able to keep up with inflation. And while investments — particularly stock portfolios — are often able to outpace inflation, many retirees don’t have those assets at their disposal.

In 2026, Social Security benefits got a 2.8% COLA. And for many seniors, that was a big disappointment.

Current estimates are calling for a larger Social Security COLA in 2027. But a more generous raise could actually backfire on you.

What the current estimates say

Social Security COLAs are based on third quarter inflation data, so it’s too soon to know what next year’s raise will look like. However, inflation readings along the way can offer clues.

Following April’s Consumer Price Index, which showed a spike in inflation, the nonpartisan Senior Citizens League updated its 2027 COLA projection to 3.9%. Earlier in the year, the group had said that 2027’s COLA might come in at just 2.8% — the same raise as in 2026. So this is clearly a big jump. But it’s not necessarily positive news.

Why seniors shouldn’t want a larger COLA in 2027

A larger raise in the new year might seem like it would help your finances. But it’s important to remember that Social Security COLAs are not designed to help retirees beat inflation. Rather, they’re basically meant to match inflation.

What this means is that if benefits get a larger COLA in 2027, it will come at the cost of higher prices. In other words, what you gain in terms of bigger checks, you might lose by:

• Paying more for groceries
• Spending more money to fill up your car
• Having higher utility bills

If 2027’s Social Security COLA comes in at 3.9%, it will be an indication that soaring inflation stuck around for much of 2026. That could put you in a bad position in the near term, and not necessarily a much better one in the coming year.

Don’t rely on a COLA to improve your financial picture

Many people who live on Social Security alone struggle. If you’re one of them, you shouldn’t count on a generous COLA to bail you out. Instead, it pays to find ways to boost your income and reduce your spending if possible. And the former may be easier than the latter, especially thanks to the gig economy.

These days, there are many paid roles you can opt to do at your own pace and on a schedule that works for you. It pays to explore different options if you’re spending your entire Social Security check each month and still aren’t managing to buy everything you need.

Ultimately, it’s too soon to know what 2027’s Social Security COLA will amount to. But what you should know is that hoping for a larger raise in the new year might backfire.

Instead of doing that, do a personal financial audit. See where your money is going and where there’s room to cut back. And pledge to return to some type of work to boost your income so you’re actually able to get ahead.