Many federal retirees will see a 2027 cost-of-living adjustment (COLA) of 3.6% added to their Social Security benefits and retirement annuities beginning in January.
The Social Security Administration’s announcement Wednesday of the 2027 COLA amount follows the Bureau of Labor Statistics‘ release of the September Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). About 76 million Americans, including retirees and individuals with disabilities, receive an annual COLA added to their Social Security benefits.
It’s a larger adjustment than what retirees and beneficiaries saw for 2026. Most annuitants received a 2.8% COLA this past January. It’s also slightly higher than the Senior Citizens League’s projection of a 3.5% COLA, but on par with AARP’s forecast of a 3.6% adjustment.
The annual COLA is meant to keep federal retirees’ and Social Security recipients’ benefits on pace with rising inflation. But not every beneficiary receives the same amount.
Civil Service Retirement System (CSRS) annuitants receive the full COLA added to their federal retirement payments, but those in the Federal Employees Retirement System (FERS) often receive a reduced adjustment.
The exact difference depends on how large the COLA is in a given year, based on the following formula:
- COLA over 3%: FERS annuitants receive 1% less than COLA
- COLA between 2% and 3%: FERS annuitants receive 2% COLA
- COLA less than 2%: FERS annuitants receive full COLA
For 2027, the above formula means FERS retirees will see a 2.6% adjustment to their annuities. CSRS retirees will get the full 3.6%.
While the impact of a smaller COLA may appear minimal in any given year, federal advocacy organizations have argued that over time, the difference can add up. After many years, reduced COLAs can create a difference of thousands of dollars.
COLA increases have averaged to about 3.1% over the last 10 years, but retirees have seen a wide range of percentages for the annual cost-of-living adjustment. Most notably, the COLA spiked to 8.7% in 2023, marking the largest increase in more than four decades.
This is a breaking story and may be updated.
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