One inflation release on Wednesday settled three retirement numbers at once. The Bureau of Labor Statistics put the September CPI-U index at 336.940, up 0.59% from August's 334.980 and 3.7% from a year earlier. Within hours, the Social Security Administration announced a 3.6% cost-of-living adjustment for 2027 — and the same data quietly resolved a $1,000 question hanging over 401(k) savers.
A 3.6% COLA, the Largest Since 2023
Benefits for roughly 72 million Social Security recipients and 7.3 million SSI recipients rise 3.6% in January. The average monthly retirement benefit goes from $2,095 to $2,170, an increase of about $75 a month.
That outpaces the 2.8% adjustment for 2026 and is the largest COLA since the 8.7% spike in 2023. The figure was not a forecast or a judgment call: the COLA is mechanical, set by the change in average CPI-W over the third quarter against the same quarter a year earlier. Running that calculation on the BLS series gives 328.746 against 317.265 — an increase of 3.619%, which rounds to 3.6%.
Higher earners pay for part of it. The Social Security wage base rises to $192,300 in 2027 from $184,500, pushing the maximum employee OASDI tax to $11,922.60 from $11,439 — about $484 more for anyone earning above the cap. The retirement earnings test limit climbs to $25,560 for beneficiaries under full retirement age, and $67,920 for those reaching it during 2027.
The 401(k) Threshold Nobody Was Watching
The less visible story sits in the same index. Milliman's 2027 IRS Limits Forecast — authored by Nina Lantz, Abby Kendig, and Steven Mariani — projected the 401(k), 403(b), and 457 elective deferral limit rising $1,000 to $25,500, but attached a condition: "If the CPI increase in September 2026 is less than 0.04%, the maximum §401(k), §403(b), §457 deferral limit may increase to $25,000 instead of $25,500."
Because the limit is rounded down to the nearest $500, four hundredths of one percent separated two outcomes. September delivered 0.59% — roughly fifteen times the required margin. The $25,500 deferral limit and the $8,500 age-50 catch-up are now locked by arithmetic.
A second Milliman condition also cleared. The firm noted that a September increase above 0.35% would lift the key employee/officer compensation threshold by $10,000 to $245,000 rather than $240,000. That trigger was met as well.
What Is Still Pending
Milliman's remaining 2027 projections: a $75,000 annual additions limit under 415(c), a $375,000 compensation limit under 401(a)(17), a $170,000 HCE threshold, and an $11,750 super catch-up for savers aged 60 to 63.
One caveat matters for planning: the IRS has not published official 2027 limits. The agency typically issues them in late October or early November, after the September CPI it just received. The inputs are now fixed and public, but until Notice season arrives, $25,500 remains a calculation rather than a rule — payroll elections for January should wait for the confirmation.
Sources: U.S. Bureau of Labor Statistics (CPI-U and CPI-W series via the BLS public API); Social Security Administration 2027 COLA announcement (October 14, 2026); Milliman, "2027 IRS Limits Forecast"; The Tax Adviser, "Social Security wage base and COLA announced for 2027"; 401(k) Specialist; CNBC.