Social Security Cost-of-Living Adjustment (COLA) Explained
How Social Security's annual inflation increase is calculated, who gets it, and why your deposit may rise by less than your benefit. The current COLA is 3.6% for 2027.
What Is the Social Security Cost-of-Living Adjustment?
A cost-of-living adjustment (COLA) is an automatic yearly percentage increase to Social Security and SSI benefits. It's meant to keep benefits' buying power roughly steady as prices rise. You don't apply for it — SSA adds it to your benefit each January.
How Is the COLA Calculated Using CPI-W?
- Step 1
Average the third-quarter CPI-W
SSA averages the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September. The Bureau of Labor Statistics publishes September's figure in October.
- Step 2
Compare it with the last COLA year
That average is compared with the same third-quarter average from the last year a COLA was paid. Usually that's the previous year; after a year with no COLA, the comparison reaches back further.
- Step 3
Round to the nearest tenth
The percentage increase is rounded to the nearest 0.1%. If prices didn't rise, there is no COLA — benefits are never cut for falling prices.
- Step 4
Apply it to December benefits
The COLA takes effect with December benefits, which Social Security pays in January. SSI's increase starts with the January payment, which can arrive on December 31 when New Year's Day falls on a weekday.
The CPI-W reflects spending by working households, not retirees. Older households typically spend more on housing and medical care, so their personal inflation can differ from the COLA.
Who Receives a COLA, and How Does It Affect Each Benefit?
How to Calculate Your Own Increase
$1,800.00 × 3.6% = +$64.80 a month
An estimate, not an SSA benefit determination. SSA rounds each benefit down to the dime; your COLA notice shows the exact amount.
Why Your Net Deposit May Rise by Less Than Your Gross Benefit
Medicare Part B premium
Deducted from most beneficiaries' checks. When it rises in the same January, it absorbs part of the COLA. A 'hold harmless' rule keeps the premium increase from lowering most people's net benefit below the prior year's, but it doesn't apply to everyone (for example, people paying IRMAA or new enrollees).
Tax withholding
Voluntary federal withholding is a percentage of your gross benefit, so it grows when the benefit grows.
Part D, Medicare Advantage premiums, garnishments, or overpayment recovery
Any amount deducted from your benefit reduces how much of the increase reaches your account.
SSI income rules
If you get both Social Security and SSI, your higher Social Security benefit counts as income, so your SSI payment may go down by a similar amount.
How Has the COLA Changed Over Time?
- Automatic annual COLAs began in 1975; before that, Congress had to legislate every increase.
- The largest COLA was 14.3%, in 1980.
- There was no COLA in 2010, 2011, or 2016, because prices had not risen enough.
COLA Estimate vs. Official Announcement
Headlines about “next year's COLA” can mean very different things depending on when you read them.
| Source | When | What it is | Status |
|---|---|---|---|
| Trustees projection | Spring/summer | A long-range assumption in the annual Trustees Report. Not based on the final third-quarter data. | Projection |
| Private forecasts | Monthly, after each CPI release | Advocacy groups and analysts extrapolate from CPI-W data published so far. | Estimate |
| SSA announcement | October, after the September CPI | The official COLA, calculated from the full July–September CPI-W average. | Official |
| Your COLA notice | Late November (online) / December (mail) | Your exact new gross benefit, deductions, and deposit amount. | Personal & official |
Frequently asked questions
Related guides & tools
Official Primary Data Sources
The COLA formula is set by Section 215(i) of the Social Security Act.
Current COLA, how it is determined, and the history of past COLAs.
The CPI-W calculation behind the most recent COLA.
Every automatic COLA since 1975.
October 14, 2026 press release announcing the 2027 COLA.
2027 SSI rates, earnings test, taxable maximum, and average benefits.
Monthly CPI-W releases used to calculate the COLA.