For retirees and disabled beneficiaries, COLA can make a meaningful difference in annual household budgets, especially when inflation is high.
Recent years have seen large swings in COLA. In 2023, beneficiaries received an 8.7% increase, the largest in decades, in response to post-pandemic inflation pressures. That was followed by more moderate adjustments of 2.5% in 2025 and 2.8% in 2026 as inflation cooled.
Looking toward 2027, economists and senior advocacy groups are now preparing for a much smaller adjustment, possibly one of the lowest in recent memory. Early estimates from retirement analysts suggest that, based on current inflation trends through mid-2026, next year’s COLA could be as low as 1.2%, according to CNBC. If that projection holds, it will mark a notable drop from the adjustments beneficiaries have grown accustomed to in recent years.
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Why Might the 2027 COLA Be So Low?
It comes down to inflation data. The CPI-W measures price changes in a basket of goods and services and over the first half of 2026, inflation has remained moderate compared with the sharp increases seen in 2021-2022. If price growth continues at its current pace through the third quarter, the period used to calculate COLA, the resulting adjustment will reflect a relatively small increase in consumer costs.
What a Modest Increase Means for Seniors’ Budgets
For retirees living on fixed incomes, even a modest COLA can feel like a lifeline, but a 1.2% increase may not go far in offsetting real expenses. Medicare premiums in 2026 are scheduled to rise and many beneficiaries spend a large share of their budget on housing, healthcare and food, which have historically risen faster than headline inflation. A small COLA may leave some recipients feeling squeezed despite the adjustment.
Advocacy groups such as The Senior Citizens League have highlighted this disconnect, noting that small increases can be eroded by out-of-pocket costs that aren’t fully captured by CPI-W. A recent AARP study showed that recipients believe a 5% increase would best cover all increased costs — not just inflation.
The official 2027 COLA won’t be announced until October and will be based on third-quarter 2026 data, so these preliminary numbers could change significantly. In the meantime, beneficiaries and their families are watching closely, aware that a smaller adjustment could have real consequences for household finances.
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This article originally appeared on GOBankingRates.com: Social Security COLA: 2027’s Increase Could Be as Low as 1.2%
