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If you count on Social Security to pay your bills in retirement, then you know that there\u2019s perhaps nothing more important than your annual cost-of-living adjustment<\/a>, or COLA. Those annual raises are what help your benefits keep up with inflation.<\/p>\n Earlier this year, Social Security benefits received a somewhat stingy 2.8% COLA. But initial projections are calling for a much larger COLA in 2027. And if current estimates end up being accurate, the typical senior on Social Security could see their monthly benefit rise by $98.<\/p>\n What next year\u2019s COLA forecast looks like<\/p>\n Inflation has been running hot in recent months in the wake of the conflict in the Middle East. That\u2019s a bad thing for consumers\u2019 wallets, but a good thing for Social Security.<\/p>\n Social Security COLAs are tied directly to inflation \u2014 specifically, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When there\u2019s a rise in the CPI-W during the third quarter of the year compared to the previous year, Social Security benefits go up.<\/p>\n Following the most recent CPI-W reading, independent Social Security analyst Mary Johnson raised her 2027 COLA forecast to 4.7%. If that projection is accurate, it spells the largest Social Security COLA in years.<\/p>\n Meanwhile, the average monthly retirement benefit for Social Security recipients today is $2,083. If benefits get a 4.7% COLA, it means the typical senior on Social Security could see their monthly income increase by $98 in 2027.<\/p>\n Don\u2019t start counting that extra money yet<\/p>\n An extra $98 a month could do a lot of great things for your retirement finances. But one important thing to realize is that the aforementioned 4.7% COLA is just an estimate.<\/p>\n Social Security COLAs are calculated based on inflation readings in July, August, and September. Johnson\u2019s projection is coming in well ahead of that data, so it\u2019s too soon to know what next year\u2019s COLA will actually amount to. And if the official COLA ends up being smaller, a $98 average raise will be off the table.<\/p>\n It\u2019s also important to remember that Medicare premium hikes<\/a> could eat into next year\u2019s Social Security COLA \u2014 whatever it amounts to.<\/p>\n Seniors who are enrolled in Social Security and Medicare at the same time pay their Part B premiums<\/a> out of their benefits automatically. So even if a 4.7% COLA comes through, if Part B\u2019s cost rises substantially, seniors could be left with a lot less money.<\/p>\n All told, banking on Social Security COLAs to make ends meet isn\u2019t a great idea \u2014 especially because no given COLA is ever guaranteed until the Social Security Administration makes it official.<\/p>\n If you\u2019re hoping for a large raise in 2027, a better idea may be to examine your spending to find ways to reduce your costs while boosting your income<\/a> in other ways. That could involve going back to work on a part-time basis or changing the way you invest so your portfolio generates more income regularly.<\/p>\n Word of an official 2027 COLA should come through in October. Until then, you can hope to see your monthly benefits rise by $98, but know that it may not actually happen.<\/p>\n