How the Social Security COLA Is Calculated
The formula, step by step
- Take the CPI-W for July, August and September — the Consumer Price Index for Urban Wage Earners and Clerical Workers, published by the Bureau of Labor Statistics.
- Average the three months for this year and for the comparison year.
- Compute the percentage increase between the two averages.
- Round to the nearest tenth of a percent. That is the COLA, applied to benefits from January (December for SSI timing purposes) and to the primary insurance amounts from which checks are derived.
The real numbers for 2027
| Third quarter | July | August | September | Q3 average |
|---|---|---|---|---|
| 2025 | 316.349 | 317.306 | 318.139 | 317.265 |
| 2026 | 327.104 | 328.481 | 330.654 | 328.746 |
(328.746 − 317.265) ÷ 317.265 = 3.62%, which rounds to 3.6%. Those six monthly index values are the entire basis of the 2027 increase — no other data, survey or forecast enters the calculation. Applied to your benefit, the same math is simply × 1.036, rounded down to the dollar: try the calculator.
Three rules that shape the result
Third quarter only. The statute measures Q3 against Q3. A price spike in February matters only if it is still in the price level by July–September.
Never negative. If the Q3 average falls, the COLA is 0.0%, not a cut — and the comparison base remains the last higher Q3 average. That ratchet is why, after prices fell in 2009, it took until 2011 for a positive adjustment (3.6%) to reappear.
Same percentage for everyone. The percentage is national and uniform: retirement, SSDI, survivors, spousal and SSI benefits all rise by the same 3.6% — the dollar amounts differ only because the underlying benefits differ.
Why the CPI-W is controversial
The CPI-W tracks the spending of urban wage earners and clerical workers — commuters and younger households — not retirees. An experimental alternative, the CPI-E, re-weights the same prices for households 62 and older: medical care and housing count more, transportation and education less. In many years the CPI-E has risen slightly faster than the CPI-W, which is why advocacy groups argue the COLA understates retirees' true cost growth, while others note that switching indexes would add to the program's long-range shortfall. Under current law, the CPI-W remains the index. The full series of results is on the COLA history page.
Frequently asked questions
How is the Social Security COLA calculated?
The SSA compares the average CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) for July, August and September of the current year with the same quarter of the last year in which a COLA was payable. For 2027: the Q3 average rose from 317.265 (2025) to 328.746 (2026), an increase of 3.62%, which rounds to 3.6%.
Why only the third quarter?
By law, the measurement uses the third quarter (July–September) because it is the most recent complete quarter of price data when the COLA is announced in October. Price changes in the other nine months matter only insofar as they carry into the next year's third quarter.
What happens if prices fall?
The COLA is set to 0% — it can never be negative, and benefits are never reduced because of deflation. The comparison base also stays at the last higher third-quarter average, which is why 2009 and 2010 both produced 0.0%.
Why the CPI-W and not the regular CPI?
The law specifies the CPI-W, which covers urban wage earners and clerical workers — about 29% of the population. A long-running policy debate concerns switching to the CPI-E, an experimental index for Americans 62 and older that weights medical care and housing more heavily.
Sources: Bureau of Labor Statistics (CPI-W, series CWUR0000SA0); Social Security Administration, 2027 COLA announcement.