Key Points
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While COLAs don’t tend to amount to much once taxes and Medicare Part B premiums are deducted, every extra dollar can be put to good use.
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One of the first (and best) things you can do with a benefit boost is to pay down high-interest debt.
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Around the time you expect a COLA to kick in is a good time to take a look at your entire household budget.
With inflation on the rise, it’s no surprise that The Senior Citizens League has its eye on October. Specifically, the nonpartisan advocacy organization is interested in the Social Security Administration’s (SSA’s) October release, announcing how much the 2027 cost-of-living adjustment (COLA) will be.
Calculated using third-quarter data from the Department of Labor’s Bureau of Labor Statistics (BLS), COLAs go into effect in January.
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Early expectations
While we’re not yet in the third quarter of the year, we do know that inflation increased by 3.8% between April 2025 and April 2026. If inflation continues at this rate through Q3, The Senior Citizens League is predicting a 2027 COLA of 3.3%.
That means someone receiving a monthly Social Security benefit of $2,000 can expect a $66 increase before taxes and any Medicare Part B increases are deducted.
Potential ways to make the most of an increase
Let’s say your monthly check is boosted by $50 after deductions. That’s $600 for the year. While you’ll still be fighting off inflation, here are some ways you can make the most of the money.
- Bolster your emergency fund: Rather than paying for an emergency with a high-interest credit card, consider depositing as much of the raise as possible into a high-interest savings or checking account where it can grow until you need it.
- Pay extra toward high-interest debt: Most credit cards carry a variable interest rate, meaning the rate tends to rise as inflation rises. Put whatever you’re able toward paying down debt.
- Reduce future expenses: There’s little chance that the cost of energy will decrease anytime soon, so take this opportunity to lower your ongoing costs by improving home energy efficiency. For example, seal gaps around windows and doors to prevent drafts, insulate your attic (or walls), insulate your water heater and pipes, and use energy-efficient lightbulbs. If your Medicare policy doesn’t cover a gym membership, consider investing in one to help you retain your strength as you age. As you’re considering healthcare in retirement, use the extra money to purchase new eyeglasses or pay for a dental visit.
The reality of COLAs
While any boost in benefits is a good thing, the reality is that many Social Security recipients watch their COLAs get eaten up by taxes and Part B premium increases. Take this time to carefully review your monthly budget to determine if there’s anything you can trim without feeling deprived. For example, cancel unused memberships and subscriptions, or negotiate better rates on insurance, phone, and internet services. When the option is available, switch to less expensive service providers.
Even if your 2027 COLA is only a few dollars a month after deductions, it’s your money. Use it in the way that benefits you most.
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