{"id":588308,"date":"2026-08-09T21:46:08","date_gmt":"2026-08-09T21:46:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/588308\/"},"modified":"2026-08-09T21:46:08","modified_gmt":"2026-08-09T21:46:08","slug":"why-social-security-recipients-could-get-shortchanged-again-in-2027","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/588308\/","title":{"rendered":"Why Social Security Recipients Could Get Shortchanged Again in 2027"},"content":{"rendered":"

Living on just
\nSocial Security<\/a> can cause seniors a world of financial strain. After all,
\nthe average monthly retirement benefit today is only about $2,084 per month,
\nwhich amounts to roughly $25,000 in annual income. But some retirees end up
\nliving mostly or solely on those benefits because their financial situations
\ndon’t allow them to build significant savings.\n<\/p>\n

\nThe good news is that Social Security benefits have built-in inflation
\nprotection. Each year, benefits are eligible for a cost-of-living adjustment, or
\nCOLA. The purpose is to help ensure that seniors don’t lose buying
\npower due to rising costs.\n<\/p>\n

\nInitial estimates indicate that 2027’s Social Security COLA could be much larger
\nthan 2026’s, but seniors might end up getting shortchanged regardless of that.\n<\/p>\n

Find Out:<\/a> 13 moves seniors could benefit from but often forget about.<\/a><\/p>\n

Social Security benefits could get a larger COLA in 2027<\/p>\n

\nEarlier this year, Social Security benefits got a 2.8% COLA. Many seniors are
\nhoping for a more generous raise in the new year. And if recent estimates are
\ncorrect, they may indeed end up with a larger boost.\n<\/p>\n

\nFollowing the most recent inflation report, the nonpartisan Senior Citizens
\nLeague updated its 2027 COLA projection to 3.8%. COLAs are based on third
\nquarter data from the Consumer Price Index for Urban Wage Earners and Clerical
\nWorkers (CPI-W). For this reason, it’s too soon to determine what next year’s
\nSocial Security raise will amount to, as data from the months of July, August,
\nand September are still needed.\n<\/p>\n

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A larger COLA may not be enough due to a flawed formula<\/p>\n

\nEven if next year’s Social Security COLA is more generous than the 2.8% raise
\nthat came through this year, there’s a good chance seniors will end up falling
\nbehind financially. And the reason boils down to a flaw in the way Social
\nSecurity COLAs are calculated.\n<\/p>\n

\nAs mentioned earlier, those raises are based on changes to the CPI-W. But the
\nCPI-W measures the spending of working Americans, not retired ones. And
\nas such, the CPI-W does not accurately reflect the costs Social Security
\nrecipients tend to face.\n<\/p>\n

\nThe Senior Citizens League says that Social Security benefits in 2026 are only
\nworth about 83.6 cents on the dollar compared to what they were worth back in
\n2016. So all told, benefits have lost 13.7% of their buying power over the past
\n10 years due to insufficient COLAs that don’t keep up with real-world price
\nincreases.\n<\/p>\n

Advocates say there’s a better way to calculate COLAs<\/p>\n

\nSome advocates are pushing for a better way to determine Social Security’s
\nannual COLAs and recommend using an index specific to older Americans \u2014 the
\nConsumer Price Index for the Elderly, or CPI-E. But there’s been hesitation to
\nadopt this change for a couple of reasons.\n<\/p>\n

\nFirst, the CPI-E is highly regarded as experimental. The Bureau of Labor
\nStatistics, which puts it out, even uses that wording itself.\n<\/p>\n

\nSecondly, switching to the CPI-E is expected to lead to larger Social Security
\nCOLAs. But as it is, Social Security is facing a serious financial crisis that
\ncould lead to benefit cuts in the not-so-distant future. Having to pay out
\nlarger COLAs could further strain the program’s limited financial resources,
\nleading to other problems.\n<\/p>\n

Save Money:<\/a> Things to cut when living on retirement (many people ignore #11)<\/a><\/p>\n

How to make up for less effective COLAs<\/p>\n

\nSocial Security’s COLA formula is unlikely to change any time very soon. It
\ncould change in the future. But in the coming years, lawmakers have the problem
\nof potential benefit cuts to contend with, so they’re less likely to prioritize
\na change to how COLAs are calculated.\n<\/p>\n

\nIf insufficient COLAs have been causing you to lose out on buying power, there
\nmay be steps you can take to compensate for that. Try to generate more
\noutside income by working in retirement. You could get a traditional part-time
\njob, start a business, or join the gig economy. Just pay attention to Social
\nSecurity’s earnings test, which applies to people working and collecting
\nbenefits prior to full retirement age.\n<\/p>\n

\nAlso, make sure to put your money into the right investments. Right now,
\ncertificates of deposit may be paying generously. But if interest rates fall,
\nthat may no longer be the case. It’s important to invest your money in a variety
\nof assets that can put regular income in your pocket, such as bonds and dividend
\nstocks or ETFs (exchange-traded funds).\n<\/p>\n

Bottom line<\/p>\n

\nSocial Security COLAs are designed to help benefits keep up with rising costs.
\nUnfortunately, they tend to trail real-world inflation for seniors due to a flaw
\nin how they’re calculated.\n<\/p>\n

\nLawmakers might one day make an important change to the COLA formula. Until
\nthen, it’s best to take matters into your own hands and set yourself up with the
\nincome you need to thrive in retirement. That could mean exploring creative ways
\nto earn money through a job or to start investing<\/a> so your
\nportfolio does more of the heavy lifting and you’re able to boost your
\nretirement income more passively.\n<\/p>\n

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