A Key Clue About Social Security's 2027 COLA Should Be Revealed This Week

There are many older Americans today who are struggling to get by on their Social Security benefits. Granted, those benefits were never meant to sustain retirees without additional income. But the reality is that plenty of people struggle to save for retirement. In a situation like that, Social Security benefits become a lifeline, as do the annual cost-of-living adjustments (COLAs) those checks are eligible for every year.

At this point, many seniors are eager to know what the 2027 COLA will amount to. An official announcement should arrive in mid-October, but later this week, seniors on Social Security should get a key clue about their upcoming COLA they won't want to miss. A big piece of data should soon arrive: Social Security COLAs are based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). We already have numbers for July, but August's reading is scheduled for September 11. Once that data comes out, experts will update their Social Security COLA forecasts or confirm whether their current projections remain valid.

The nonpartisan Senior Citizens League, an advocacy group, expects a 3.6% COLA for 2027, while independent analyst Mary Johnson is calling for a 3.4% boost. Have realistic expectations: if you're on Social Security, you may be eager to find out what your 2027 raise will look like. However, your upcoming COLA probably won't improve your financial situation all that much, even if that raise is fairly generous. Any time there's a larger COLA than average, it comes at the cost of higher inflation, meaning you lose money on essentials like groceries and gas.

This doesn't mean the number isn't important, but if you're struggling to cover your costs, a large COLA in 2027 won't make expenses easier to manage. You may want to take other steps to improve your situation, such as reducing expenses or pursuing part-time work. Earning a few hundred dollars a month will likely put more money in your pocket than the upcoming COLA, helping you better keep up with your bills.

Source: The Motley Fool