How the COLA is worked out
The cost-of-living adjustment follows a formula set by law. SSA takes the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August and September, averages it, and compares that with the same three months a year earlier. The rise, rounded to the nearest tenth of a percent, is the COLA for benefits paid from January. If prices fall, there's no COLA, and benefits don't go down.
COLA = average CPI-W (Jul–Sep this year) ÷ average CPI-W (Jul–Sep last year) − 1
For 2027, last year's average is 317.265. SSA announced a 3.6% COLA.
Worked example
A $2,000 monthly benefit with a 3.6% COLA becomes $2,072.00, paid as $2,072: SSA rounds monthly benefits down to the whole dollar. That's $72 more a month, or $864 over the year.
With Medicare Part B taken out at $202.90, the deposit goes from $1,797.10 to $1,869.10, if the premium stays the same. A higher 2027 premium would take part of the raise; enter it when Medicare announces it.
Things to know
- When it arrives. The COLA shows up in the benefit paid in January. SSI payments rise from December 31.
- Medicare can take part of it. The Part B premium usually changes in January too. For most people whose premium is taken from their benefit, a "hold harmless" rule stops the premium increase from being larger than their COLA increase, so the deposit doesn't shrink.
- Why it's a dollar off. SSA applies the COLA to your primary insurance amount before rounding, so your letter can differ by a dollar from this estimate.
- Taxes. A higher benefit can make more of it taxable if you have other income. Your January benefit letter shows the new amount.
- Still deciding when to claim? COLAs apply whether or not you've started benefits. The Social Security claiming calculator compares 62, 67 and 70. Still working? The earnings test calculator shows what the earnings limit holds back.
Questions people ask
What is the 2027 COLA?
3.6%, announced by SSA.
When will I see the increase?
In the benefit paid in January 2027. SSA sends COLA notices in December, posting them in my Social Security accounts before the paper letters arrive.
Why CPI-W and not the inflation rate I hear on the news?
The law ties the COLA to the CPI-W, which tracks prices for households earning mostly from wages. The headline inflation rate is the CPI-U, for all urban consumers. They usually move closely together.
Sources
- Social Security Administration: cost-of-living adjustment information
- SSA Office of the Chief Actuary: cost-of-living adjustments since 1975 and how they are determined
- BLS: CPI for Urban Wage Earners and Clerical Workers (CPI-W), data through September 2026
- BLS: CPI release schedule (September 2026 CPI on October 14, 2026)
- CMS: 2026 Medicare Part A and B premiums ($202.90 standard Part B premium)
Reviewed October 17, 2026 by The Dollars World team. How we build and check our calculators · Our data and formulas. This is general information, not financial advice.