Why the 2027 COLA Might Be Too Little, Too Late for Social Security Recipients

Social Security recipients received some major news in October – they’ll be getting a 3.6% cost-of-living adjustment (COLA) to their benefits in 2027. That increase of about $75 more per month was higher than some pundits and economists predicted.

However, a number of retirement advocates warn that the 2027 COLA may already have fallen behind the 2027 bills it’s supposed to help cover. MoneyLion explored what this means for the finances of Social Security recipients.

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The Problem: COLA Looks Back While Prices Move Forward

Part of the issue is built directly into the COLA calendar. The government calculates the adjustment using inflation data from July through September of a calendar year, but Social Security beneficiaries don’t receive the increase until the following year, when prices may have already increased beyond the measurement period.

This makes a meaningful COLA difficult, especially during politically and economically turbulent times. Senior Citizens League executive director Shannon Benton offered a critique of COLA by pointing out that geopolitical shocks like the Iran War are not predicted by COLA; specifically, the 2026 COLA was determined in the autumn of 2025, before the Iran War destabilized markets and sent gas and fuel prices skyrocketing. Additionally, Nancy Altman, president of Social Security Works, told Yahoo Finance that COLA “under-measures” inflation, also pointing to the effects of the war, as well as tariffs.

In short, a 3.6% increase might look substantial on paper and when compared to other COLA updates, but its value depends on what happens to household expenses before the higher payments arrive. Retirees can’t count on COLA to cover every price increase and seismic political-economic shift between now and 2027.

Health Costs Could Destroy the COLA Raise

For some retirees, healthcare is where the 2027 COLA truly falls short. For example, The Hill reported an experience of 71-year-old Minnesota retiree Lorrie Ufkin, who said her Medicare premiums and prescription drug costs were expected to rise in 2027. She also made clear the COLA would not cover the healthcare expense hikes she was anticipating.

Many older Americans already suspect annual adjustments are lagging behind their budgets. In the Senior Citizens League’s 2026 survey, 89% of respondents said the 2026 COLA was still too low, and they felt their benefits would fall behind inflation. Also, an AARP poll cited by The Hill found about three-quarters of Americans aged 50 and older disagreed that the 2027 COLA would be enough to keep pace with rising prices.

The concern of those polled is that each retiree faces their own combination of expenses, and a generalized across-the-board increase cannot match every household’s actual costs. For instance, when a specific medical bill or insurance premium rises, there may be little room in an individual retiree’s budget to absorb the difference, COLA or no COLA.

The Bottom Line

The 2027 COLA will certainly increase Social Security checks, but recipients are likely to notice that uptick after their budgets have already taken a number of hits (especially after a politically-bumpy midterm election season). Many expect healthcare alone to eat the entirety of the extra $75 per month, if not more.

A COLA of 3.6% sounds significant, until you’re adjusting your budget and realize it adds less than $100 to your spending ability. Reviewing your bills before January 2027 might give you some added flexibility, but don’t expect this new COLA to truly expand your purchasing power.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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