As you prepare for retirement, Social Security will likely play an important role in your overall income strategy. That makes the annual Social Security cost-of-living adjustment, or COLA, worth watching. Current forecasts suggest that beneficiaries could see another increase in 2027, but it is important to understand what that increase can and cannot do for your retirement plan.
Recent estimates put the projected 2027 Social Security COLA at approximately 3.5% to 3.6%. That would be higher than the 2.8% adjustment for 2026. A 3.5% increase could add roughly $68 to $75 per month to the average retired worker’s benefit, depending on the benefit amount used as a starting point.
However, the 2027 COLA is not official yet. The final adjustment will be determined using inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The official announcement is expected October 14, 2026, after the final September inflation figures become available. The new benefit amount would then take effect with benefits paid beginning in January 2027.
For someone preparing for retirement, there is a larger lesson here: Social Security benefits change over time, and so do your expenses.
COLAs are intended to help Social Security benefits keep pace with inflation, but that does not necessarily mean your personal expenses will rise at exactly the same rate. Housing, healthcare, insurance, food, transportation, and other costs can follow very different patterns. Medicare premiums and out-of-pocket healthcare expenses can also consume part of an increase in Social Security income.
This is why retirement planning should look beyond your initial Social Security benefit. Your plan should consider how your income and expenses could evolve over a retirement that may last 20 or 30 years or longer.
It is also important to think about Social Security as one component of a larger retirement income strategy. Your retirement plan may include withdrawals from 401(k)s, IRAs and other investments, along with pensions or additional sources of income. Decisions about when to claim Social Security and how to coordinate those benefits with withdrawals can have long-term implications.
As we approach the official 2027 COLA announcement, this is a good time to review your retirement income projections. Rather than focusing only on next year’s increase, consider whether your overall strategy is designed to accommodate inflation, changing expenses, taxes, and healthcare costs throughout retirement.
If you’re approaching retirement, schedule an appointment with our financial planning team. We can review your Social Security strategy and help you determine how it fits into your broader retirement plan.
