The 2027 COLA is 3.6% for CSRS and Social Security and 2.6% for FERS. See how much more federal retirees will receive and how the COLA was calculated.

Millions of Social Security recipients and retired federal employees now know how much their retirement payments will increase in 2027. The answer is good news for retirees facing higher prices, although some federal retirees will receive a smaller increase than others. Based on inflation figures released October 14 by the Bureau of Labor Statistics (BLS), the 2027 cost-of-living adjustment (COLA) is 3.6% for Social Security recipients and Civil Service Retirement System (CSRS) retirees. Eligible Federal Employees Retirement System (FERS) retirees will receive 2.6%.

The increase is larger than the 2.8% COLA paid in 2026 and the largest annual adjustment since 2023.

For federal retirees, the new figures mean higher monthly annuity payments beginning in January. How much higher depends on their retirement system and current annuity.

How Much More Will Federal Retirees Receive?

Using the estimated average annuities from FedSmith’s September 17 COLA article, here is what the 2027 COLA means for an average federal retiree:

These estimates assume average monthly annuities of approximately $6,000 for CSRS and $2,400 for FERS. Actual increases depend on each retiree’s gross annuity and eligibility.

A CSRS retiree receiving $5,000 per month, for example, would see an increase of approximately $180, bringing the monthly annuity to $5,180. A FERS retiree receiving $3,000 per month would see an increase of approximately $78, bringing the monthly annuity to $3,078.

These figures are before deductions for federal income taxes, health insurance premiums and other withholding.

For retirees receiving both a FERS annuity and Social Security, the increases apply separately. Their Social Security benefits receive the full 3.6% adjustment, while their eligible FERS annuity receives 2.6%.

Why FERS Retirees Receive a Smaller COLA

The difference between CSRS and FERS cost-of-living adjustments dates to 1986, when Congress created FERS to replace CSRS.

CSRS retirees generally receive the full increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the same inflation measure used for Social Security benefits. FERS retirees are subject to a modified formula, sometimes called the “diet COLA.”

Under the Office of Personnel Management’s COLA rules:

• When inflation is 2% or less, eligible FERS retirees receive the full adjustment.
• When inflation is more than 2% but no more than 3%, FERS retirees receive 2%.
• When inflation exceeds 3%, the FERS adjustment is one percentage point below the full inflation adjustment.

With the CPI-W up 3.6%, eligible FERS retirees therefore receive 2.6%.

Congress designed FERS as a three-part retirement system that combines a smaller federal pension with Social Security and the Thrift Savings Plan (TSP). The reduced pension COLA was one of the differences built into that system.

How the 2027 COLA Was Calculated

The COLA calculation is based on the CPI-W, published monthly by BLS.

Although news reports frequently cite the broader Consumer Price Index for All Urban Consumers (CPI-U), that is not the index used to determine Social Security and federal retirement COLAs. Instead, the calculation compares the average CPI-W for July, August and September of the current year with the average for the same three months of the preceding year.

Here are the figures used to determine the 2027 adjustment:

The calculation is:

(328.746 − 317.265) ÷ 317.265 × 100 = 3.619%

Rounded to the nearest tenth of one percent, the 2027 COLA is 3.6%.

The September CPI-W was the final figure needed to complete the calculation. The October 14 BLS inflation report showed the CPI-W increased 3.9% over the preceding 12 months. That figure differs from the 3.6% COLA because it compares September to September rather than comparing the averages for the two third quarters.

How Does the 2027 COLA Compare to the Past 10 Years?

The 2027 adjustment is higher than most annual increases over the past decade but substantially less than the unusually large adjustments during the inflation surge of 2022 and 2023.

Sources: Social Security Administration historical COLA data and OPM’s FERS adjustment formula. Years show when increases were paid. FERS percentages assume eligibility for a full annual COLA.

The highest COLA during this period was 8.7% in 2023, reflecting the sharp inflation that followed the COVID-19 pandemic and associated economic disruptions. Retirees received only a 0.3% adjustment in 2017.

The 2027 increase is the third-largest adjustment in the 11-year period shown.

What About Social Security Benefits?

Social Security recipients will also receive the 3.6% increase. A retiree currently receiving $2,100 per month would see an increase of approximately $76, bringing the monthly benefit to about $2,176. A $3,000 monthly benefit would rise by approximately $108.

The Social Security COLA becomes effective with December 2026 benefits, which are generally paid in January 2027. Federal retirement annuity increases also generally appear in payments received in January.

Retirees should remember that an increase in Medicare Part B premiums could reduce the net increase in Social Security payments. The COLA applies to gross benefits, not necessarily the amount deposited into a recipient’s bank account.

The Bottom Line for Federal Retirees

The 2027 COLA provides a larger increase than retirees received in either 2025 or 2026. It will help offset higher living costs, but whether retirees actually gain purchasing power will depend on what happens to inflation, insurance premiums, taxes and other household expenses during 2027.

For now, retirees have the information needed to begin planning their budgets for the coming year.