Social Security's 2027 COLA Forecast Just Took an Unexpected Turn
Written by Maurie Backman for The Motley Fool -> Social Security's cost-of-living adjustments help beneficiaries keep up with rising costs. Though it's too soon for an official COLA announcement, estimates exist for next year's raise. A new inflation report just reset those pr
Social Security's cost-of-living adjustments help beneficiaries keep up with rising costs.
Though it's too soon for an official COLA announcement, estimates exist for next year's raise.
Social Security isn't a benefit that retirees only get to collect for a handful of years. For some people, those monthly checks could continue for decades. That's why the program's cost-of-living adjustments , or COLAs, are so important.
The purpose of Social Security COLAs is to adjust benefits each year in line with inflation. If those COLAs didn't exist, many retirees would not have a way to keep up with rising costs, since plenty of Social Security recipients rely on those benefits for most or even all of their senior income.
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While it's too early in the year to make an official Social Security COLA announcement, experts can use current inflation data to take an educated guess on next year's raise. A recent inflation report just changed that number in a very significant way.
In May, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 4.4% on an annual basis. The CPI-W serves as the basis for Social Security COLAs each year.
Specifically, CPI-W readings from July, August, and September are compared to the previous year. If there's an increase during that time period, Social Security benefits go up the following year.
