For a majority of retirees, Social Security income is a necessity to make ends meet. According to a quarter century of Gallup surveys, up to 90 percent of retirees rely on their monthly Social Security check to cover at least part of their expenses.
Given the importance of Social Security income to the financial well-being of retirees, perhaps no announcement is more anticipated than the annual cost of living adjustment (COLA) reveals. In just four days, on October 14, the September inflation report will be released, providing the final piece of the puzzle to calculate Social Security’s 2027 COLA.
The best way to look at Social Security’s quasi-annual COLA is to consider the “increase” passed to beneficiaries to counter the effects of inflation over the past year. If the cost of a large basket of goods and services increases by 3% year over year, profits would have to increase by 3% to avoid a loss of purchasing power. This is where the Social Security COLA comes into play.
Image Source: Official White House Photo by Molly Riley.
The 2027 Social Security COLA should be very special and especially important, thanks to President Donald Trump. Although the program’s historic “Trump bump” is likely to get all the attention, it is an expected glimmer of hope for tens of millions of beneficiaries – the first since 2023 – that deserves to be highlighted.
Social Security increase in 2027 expected to result in one of the largest increases in 35 years
Since the Consumer Price Index for Urban Wage Earners and Office Workers became Social Security’s measuring stick for price developments in 1975, inflation (rising prices), and thus the need to increase Social Security, has occurred in all but three years (2010, 2011, and 2016).
Modest inflation levels are normal when the U.S. economy is expanding. Companies with pricing power over their goods and services can raise their prices over time, resulting in larger monthly checks for Social Security recipients.
But because of two policies from President Donald Trump, Social Security’s COLA is expected to be unusually high in the coming year.
For a second year in a row, the president’s tariff and trade policies are expected to lead to a boost from Trump. Last year, tariffs imposed by Trump on “Liberation Day” pushed up consumer prices. Although the U.S. Supreme Court overturned these tariffs in February 2026, their impact was still felt during the second half of 2025.
In July 2026, the Trump administration imposed a new round of drastic global tariffs using a different justification. Adding duties on unfinished imported goods risks increasing domestic production costs, which, in turn, increases consumer prices.
Price changes from last year (August CPI report) Fuel oil: +52.0% Gasoline: +27.4% Gas Utilities: +4.4% Electricity: +3.8% Clothing: +3.6% Overall CPI: +3.4% Food away from home: +3.4% Housing: +3.0% Medical care: +2.5% Transportation: +2.4% Food at home : +2.2% New cars: +0.6% used Automobiles: -2.3%
– Charlie Bilello (@charliebililo) September 11, 2026
The biggest impact on consumers’ wallets, and the reason Social Security’s 2027 COLA will be among the largest in 35 years, is the war in Iran led by Trump. For more than seven months, the Strait of Hormuz has been closed to virtually all maritime traffic, disrupting the daily movement of around 20 million barrels of petroleum liquids.
The impact of the war in Iran on energy prices is undeniable. Gas prices rose at the fastest pace in three decades, while diesel prices hit a new all-time high in September.
The collective effects of Trumpflation (inflation driven by Trump’s policies) are expected to cause Social Security benefits to increase by 3.5% over the coming year. The Senior Citizens League, a nonpartisan senior advocacy group, and Mary Johnson, an independent Social Security and Medicare policy analyst, have projected a 3.5% COLA for 2027.
If these predictions are accurate, it would rank tied for sixth in COLAs since 1993. Additionally, it would mark the sixth consecutive year with an increase of at least 2.5% – a feat that hasn’t been seen in 30 years.
Image source: Getty Images.
A rare glimmer of hope for Social Security appears to be on the way
While larger monthly benefit checks tend to please the more than 71 million traditional Social Security beneficiaries, there’s much more to talk about in 2027 for a group of nearly 29 million retirees currently enrolled in traditional Medicare. For these tens of millions of retired beneficiaries, a rare glimmer of hope is (probably) about to become a reality.
Nearly half of eligible retirees ages 65 and older are enrolled in traditional Medicare, which consists of:
- Part A: Hospital care
- Part B: Outpatient services
- Part D: Prescription medications
About 99% of workers don’t pay a cent for Part A, but Parts B and D have a monthly premium. In 2026, the standard monthly premium for Part B is $202.90 and is traditionally deducted from a Social Security recipient’s monthly payment.
BREAKING: 71 million Social Security beneficiaries will receive a 2.8% cost of living adjustment (COLA) starting in January 2026. The average annual increase over the past decade: 3.1%. https://t.co/l5IYmkf6Ih https://t.co/pgqtPLgqMB
— Charlie Bilello (@charliebililo) October 24, 2025
The problem for retirees is that the Medicare Part B premium has increased at a much faster rate than the Social Security COLA for much of the 21st century. For example, over the past three years, Social Security increases of 3.2% (2024), 2.5% (2025), and 2.8% (2026) have been offset by Medicare Part B premium increases of 5.9% (2024), 5.9% (2025), and 9.7% (2026), respectively. When Part B increases significantly faster than the Social Security COLA, retirees forgo part or all of their annual increase.
However, a rare glimmer of hope is emerging for these tens of millions of retirees in 2027. According to the 2026 Medicare Administrators’ Report, the standard Part B premium is only expected to increase by $6.60/month to $209.50/month next year, which equates to a 3.25% increase.
Although estimates remain fluid, current projections project that Social Security’s increase (3.5%) will be larger than Part B’s increase (3.25%). This would be the first time since 2023 that the Social Security COLA increased at a faster rate than Part B.
More importantly, this should allow these retirees to keep more of their COLA from next year. It’s a glimmer of hope that deserves to be celebrated.
Gn bussni
