Your Social Security COLA could go up another $71 per month in 2027. That’s not necessarily good news.

A higher Social Security cost-of-living adjustment (COLA) may sound like a windfall, but it is largely a reflection of the inflation that preceded it. The COLA is designed to help benefits keep pace with rising prices, not to increase purchasing power. If forecasts point to an additional $71 per month in 2027, that figure is an estimate of how much more the average beneficiary might receive — not a guarantee of greater real income.

The key context is that COLAs are calculated using inflation data, so a larger adjustment typically signals that consumer prices have been rising faster than previously assumed. For markets, that matters because persistent inflation can influence interest rate expectations, bond yields, and the outlook for rate-sensitive sectors. It also affects the federal budget, since higher benefit payments increase program costs.

What to watch: the official inflation readings that feed into the COLA formula, and whether wage growth and price pressures cool in the months ahead. A bigger adjustment offers needed relief, but it is not evidence that inflation has been tamed.