The Social Security Administration said Wednesday that Social Security payments and retirement benefits will rise 3.6% in January 2027. But many Federal Employees Retirement System annuitants will get only a 2.6% adjustment, a smaller increase that leaves them behind the full cost-of-living lift.
The announcement came after the Bureau of Labor Statistics released the September Consumer Price Index for Urban Wage Earners and Clerical Workers, the measure used to set the annual COLA. About 76 million Americans receive a yearly COLA on their Social Security benefits, and most annuitants received a 2.8% increase in January 2026, so the new figure marks a modest step up from last year.
The 2027 increase is slightly higher than the Senior Citizens League's 3.5% projection and matches AARP's 3.6% forecast. That makes the headline number look familiar, but it does not change the split that matters for federal retirees: Civil Service Retirement System annuitants get the full COLA, while FERS retirees often receive less, with the exact difference tied to how large the COLA is in a given year.
William Shackelford, speaking for the Senior Citizens League, said FERS retirees will have their COLAs reduced by an entire percentage point, cutting the real value of their annuities. He added that inflation hits these retirees the same way it hits everyone else, yet they are forced to accept a diet COLA. The group has long argued that smaller FERS adjustments can compound over time and leave retirees thousands of dollars short.
That complaint lands again because the 2027 adjustment arrives after a year in which most annuitants got 2.8%, and after a period when COLA increases averaged about 3.1% over the last 10 years, with the COLA spiking to 8.7% in 2023. NARFE said the reduced FERS COLA does not keep pace with inflation or rising federal health insurance premiums, which is why the gap is more than a technical formula dispute; it is the difference between one retirement system that tracks prices and another that trails them.
The Equal COLA Act is the main legislative answer on the table. Introduced in January 2025, the pending House bill has 90 cosponsors and would give FERS annuitants the full COLA each year, but it has seen no movement so far. Shackelford said the measure would remedy the inequity and that FERS retirees deserve full protection to maintain the purchasing power of their annuity throughout retirement. For now, the 3.6% COLA is settled; the unresolved question is whether Congress will do anything about the smaller 2.6% increase before it takes effect in January.
