There are many retirees who end up collecting Social Security benefits for decades. And that’s what makes the program’s annual cost-of-living adjustments, or COLAs, so important.
Social Security COLAs used to come about through votes in Congress. In the mid-1970s, the system changed to allow COLAs to be implemented automatically based on inflation readings.
Each year, the Social Security Administration (SSA) typically makes an official COLA announcement in October. And this year, news of a 2027 COLA should come out on Oct. 14.
But you don’t necessarily have to wait until mid-October to learn more about next year’s COLA. Although an official number won’t be released until then, there are some key clues that should drop along the way.
July data starts the calculation
Social Security COLAs are based on third quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For this reason, July is an important month for Social Security.
But July’s CPI-W data doesn’t become available until August, because it takes time to compile that data after the close of the month. That data is slated to be released on Aug. 12.
If July’s CPI-W reading comes in higher than expected, it could increase estimates for the 2027 COLA. On the other hand, if July points to cooling inflation, it could serve as a heads-up that a smaller Social Security COLA may be in the cards.
August and September complete the calculation
Once July’s CPI-W comes in, attention should turn to August and September. August’s CPI-W is scheduled to be released on Sept. 11. Once that happens, we can expect analysts to update their 2027 COLA projections.
But the data won’t be complete until September’s CPI-W drops, which is slated to happen on Oct. 14. The SSA tends to act quickly following that information, and COLA announcements are usually made that same day.
Will there be a delay in announcing the upcoming COLA?
Last year, the SSA was forced to delay its official COLA announcement because September’s CPI-W data was delayed due to the government shutdown. If a similar thing occurs this year, retirees could end up having to wait a bit longer to find out how much their Social Security checks will increase in the new year.
Also keep in mind that even if next year’s COLA announcement happens on time, the Centers for Medicare & Medicaid Services may not have its official Medicare Part B premium costs at that point.
Seniors who are enrolled in Social Security and Medicare at the same time have their Part B premiums deducted automatically from their monthly benefits. So if there’s an increase in the cost of Part B, which is expected, it could whittle down next year’s COLA.
This year, the cost of Part B rose $17.90. Next year’s increase may be smaller, but it could still have an impact. For this reason, retirees shouldn’t start counting on any given raise for 2027 until they have all of the information they need for a complete picture.
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