"In most years, retirees get a Cost of Living Adjustment (COLA). The COLA is called a raise because it results in a retiree's monthly benefits check getting bigger. The purpose of it is to make sure that Social Security benefits don't lose all their value over time due to inflation. Since prices increase in most years, if Social Security benefits stayed the same without a COLA, then each year, benefits would buy a little less."
"Many retirees rely on their COLA to help them make ends meet, especially since Social Security benefits only replace about 40% of income for seniors, and a substantial number of people with too little savings depend heavily on these benefits. Unfortunately, the first look at next year's Social Security raise is now available, and there's reason for retirees to be concerned about what they see."
Cost-of-living adjustments (COLAs) raise monthly Social Security benefits to offset inflation and preserve purchasing power. Many retirees depend on COLAs because Social Security replaces roughly 40% of seniors' income and some have inadequate savings. Early projections estimate a 2.5% COLA for 2027. That percentage is smaller than recent post-pandemic raises, tied with 2025 as the smallest since 2022, and follows increases of 2.8% (2026), 3.2% (2024), 5.9% (2022), and 8.7% (2023). Persistent inflation above the Federal Reserve's 2% target threatens retirement savings and living standards.
Read at 24/7 Wall St.
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