Retirement Social Security

Why Your 2027 Social Security COLA Won’t Go as Far as You Think - And What to Do Instead

Social Security benefits are getting a big raise, but don't start counting the money just yet.

By Maurie Backman , Edited by Laura Hohenstein

Updated Nov. 4, 2026

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Many older Americans today are living on just Social Security. And if you're in that situation, you may be relieved to know that benefits are getting a 3.6% cost-of-living adjustment, or COLA, in the new year.

Social Security benefits are eligible for a COLA each year based on inflation. At the start of 2026, benefits got a 2.8% COLA, and the year before, benefits only went up 2.5%. The 2027 COLA is therefore the largest to come through for Social Security recipients in several years.

You may be expecting your 2027 Social Security COLA to improve your financial picture, but there are several reasons why it may fall short, and why you need to have a backup plan.

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Your upcoming COLA may not hold up as well to inflation

One misconception about Social Security COLAs is that they can help your finances improve. But all those annual increases are meant to do is help benefits keep up with inflation.

COLAs aren't designed to help benefits beat inflation. So you shouldn't expect a 3.6% raise in the new year to improve your finances on a whole.

Plus, Social Security COLAs have historically failed to actually keep up with inflation even though that's their purpose. The Senior Citizens League says that Social Security benefits have lost 13.7% of their buying power over the past decade due to the fact that COLAs have not kept up with inflation.

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A big Medicare increase could eat away at your raise

Another issue you might run into with your upcoming Social Security COLA is that a big increase in the cost of Medicare B could eat into your 2027 raise. If you're enrolled in both Medicare and Social Security, you may know that your premiums for Part B get paid out of your benefits directly. So any uptick in the cost of Part B will leave you with a smaller COLA.

In 2026, the cost of Medicare Part B rose by $17.90 per month. Even a smaller increase, though, could erode the COLA that arrives in January.

Working part-time could help you keep up with your costs

If you're hoping your 2027 Social Security COLA will help your financial picture improve, you may want to rethink your plan and start looking for a part-time job. Working a few days a week could help you increase your income substantially and put a lot more money in your bank account than your upcoming COLA.

If you don't like the idea of working on a preset schedule, you can try joining the gig economy. You can do things like drive for a ride-hailing service or pet sit on a schedule that works for you, whether it's a few afternoons a week or every other weekend. That way, there's less pressure, but you still have a solid opportunity to earn money.

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Reducing spending strategically is also key

In addition to looking into work opportunities, another way to improve your financial picture in the new year is to shed expenses where you can. That could mean making big changes or smaller ones.

If you own a home and you don't need as much space, downsizing could help. A smaller home could mean lower property taxes, smaller insurance premiums, and less money spent on utilities, maintenance, and repairs. Even if you don't own your home, downsizing could mean lowering the cost of rent.

Smaller changes could help, too. Look through your bank account and credit card statements to see exactly what you're spending money on each month. There may be a subscription you can cancel, or one you can share with a neighbor that helps lower your costs. If money is very tight, even modest changes can make a big difference, so don't assume that dropping a $15 service here and there isn't worth it.

Finally, you may want to look at relocating if you live in a more expensive part of the country. Moving to a city or area with lower costs on a whole could help you better manage financially.

Bottom line

Your Social Security benefits may play a big role in your retirement plan. And you may be reasonably happy with your upcoming COLA given that it's the largest one to arrive in several years.

But it's important to have realistic expectations going into the new year. The best the upcoming Social Security COLA might do is allow your benefits to keep up with inflation, and even that may not happen. So it's important to take matters into your own hands.

Boosting your income with a part-time job could help alleviate some of your financial stress. At the same time, reducing spending could give you more breathing room. These changes may not be easy ones to implement if you're used to not working and maintaining a certain lifestyle, but they're worth making so you're able to gain more long-term financial stability.

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