Is the Social Security COLA formula changing?

No. No bill changing the formula has passed. H.R. 9089, introduced in June 2026, would create a commission to study alternative indexes including the CPI-E, but it would not change the formula itself. The 2027 COLA is set at 3.6% under current law.

Who would a change to the COLA formula affect most?

Whoever collects benefits the longest, because each year's difference compounds. Someone who claims at 62 and lives into their nineties would feel a switch far more than someone who claims at 70. That is why the chained CPI appears in deficit-reduction plans and the CPI-E in benefit-expansion plans.

Chained CPI vs. CPI-E: How the COLA Could Change

Q: How is the Social Security COLA calculated?

SSA averages the CPI-W, a consumer price index for urban wage earners and clerical workers, for July, August and September, and compares it with the same three months a year earlier. The percentage increase, rounded to a tenth of a percent, becomes the next year's COLA. If prices fall, there is no COLA and benefits do not go down.

Q: What is the chained CPI and how would it affect Social Security?

The chained CPI accounts for people switching to cheaper goods when prices rise, so it usually grows more slowly. The Congressional Budget Office found it rose about 0.25 percentage points a year more slowly than the traditional CPI measures since 2001. Using it for Social Security would make each COLA slightly smaller, and the gap compounds: roughly 5% lower benefits after 20 years in a simple illustration.

Q: What is the CPI-E?

An experimental Bureau of Labor Statistics index that reweights prices toward what Americans 62 and older buy, with more weight on health care. The Congressional Research Service found it rose an average of 3.1% a year from 1982 to 2010, versus 2.9% for the CPI-W. CRS also cautioned that it is built on a small sample and may not reflect the prices older people actually pay.

Social Security's COLA is pegged to the CPI-W. Switching to the chained CPI would shrink yearly raises and save money; the CPI-E would enlarge them and cost money. Neither is law, and your 2027 raise stays 3.6%. Here's how each would work and why small gaps compound.

Social Security’s annual raise is tied to one inflation index, the CPI-W, and two alternatives keep coming up in the solvency debate. Switching to the “chained” CPI would make each year’s COLA a little smaller and save the program money. Switching to the CPI-E, an index built around older Americans’ spending, would make it a little larger and cost money. Neither change is law, and neither touches your 2027 raise, which is set at 3.6%. Here is how today’s formula works, what each alternative would do, and why a fraction of a point adds up.

How the COLA is calculated today

Each year SSA takes the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August and September, and compares it with the same three months a year earlier. The percentage increase, rounded to a tenth of a percent, becomes the next year’s COLA. If prices fall, there is no COLA, and benefits do not go down. That is how the 2027 COLA came out at 3.6%.

The long-running complaint about the CPI-W is that it tracks the spending of working households, not retirees. Older people put a bigger share of their budget toward health care and housing, and less toward things like gasoline and new cars.

Option 1: the chained CPI, which means smaller raises

The chained CPI tries to account for people switching to cheaper goods when prices climb, such as buying chicken when beef gets expensive. Because it builds in that substitution, it usually rises more slowly. The Congressional Budget Office has found it grew about 0.25 percentage points a year more slowly than the traditional CPI measures since 2001.

This is not new territory. The 2010 Simpson–Bowles fiscal commission recommended it, and the 2017 tax law already uses the chained CPI to adjust federal income tax brackets.

Option 2: the CPI-E, which means larger raises

The CPI-E is an experimental index from the Bureau of Labor Statistics that reweights prices toward what Americans 62 and older buy, with more weight on health care. It has historically run higher. The Congressional Research Service found it rose an average of 3.1% a year from December 1982 to December 2010, against 2.9% for the CPI-W. The Social Security 2100 Act would base the COLA on whichever of the two is higher.

There is a catch. CRS has cautioned that the CPI-E is experimental, built on a small sample, and may not reflect what older people actually pay, such as where they shop or the discounts they get.

Why a fraction of a point matters

The gap looks tiny in any single year, but it compounds for as long as you collect. As a simple illustration: if the chained CPI kept running 0.25 points below the CPI-W, a benefit would end up roughly 2.5% lower after 10 years, and close to 5% lower after 20, than under today’s formula. A CPI-E running 0.2 points higher would leave a benefit about 4% higher after 20 years.

Because the effect grows with time, it lands hardest on whoever collects longest. Someone who retires at 62 and lives into their nineties feels it far more than someone who claims at 70. That is also why the chained CPI tends to appear in deficit-reduction plans and the CPI-E in benefit-expansion plans.

Where it stands now

No bill changing the COLA formula has passed. A House bill introduced in June 2026, H.R. 9089, would create a commission required to study alternative indexes including the CPI-E, but it would not change the formula itself. Your 2027 raise is fixed at 3.6% under current law.

What it means for you

Nothing changes for your check today. If a COLA change does reach a vote, the questions to watch are which index, when it would start, and whether it would apply to people already collecting or only to future retirees. To see what your own benefit looks like under current law, run it through our benefits calculator.

This article is general educational information, not financial advice. The CPI-E comparison is from the Congressional Research Service (RS20060); the chained-CPI growth gap is from the Congressional Budget Office's budget-options analyses; the compounding figures are our own illustration and assume those historical gaps continue. SocialSecurityNews.com is not affiliated with or endorsed by the Social Security Administration.