Key Points
One of the most anticipated days of the year for Social Security’s more than 71 million traditional beneficiaries — the cost-of-living adjustment (COLA) reveal — is rapidly approaching.
Two of President Trump’s policies are directly affecting consumer prices and influencing next year’s Social Security COLA estimates.
In addition to traditional beneficiaries receiving one of the largest raises of the last 36 years, select retirees appear set to benefit from a rare silver lining.
We’re getting close to one of the most exciting times of the year for Social Security’s more than 71 million traditional beneficiaries (retired workers, workers with disabilities, and survivors of deceased workers). I’m talking about the annual unveiling of Social Security’s cost-of-living adjustment (COLA), which is slated for Oct. 14.
Put simply, Social Security’s COLA is the “raise” beneficiaries receive to combat the effects of inflation and avert a loss of buying power. Since rising prices (inflation) are perfectly normal in an expanding economy, the Social Security Administration has passed along a raise to its beneficiaries in all but three years (2010, 2011, and 2016) since 1975.
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Social Security’s 2027 COLA is set to make history on three fronts, thanks in part to policies put in place by President Donald Trump.
Social Security benefits are on track for a second consecutive Trump bump
As noted, a modest level of inflation, marked by businesses possessing some degree of pricing power over their goods and services, is expected when the U.S. economy is expanding. But since President Trump’s inauguration in January 2025, we’ve witnessed that some of his policies have directly affected the prevailing inflation rate.
For example, in early April 2025, Trump unveiled his long-awaited sweeping global tariffs and higher reciprocal tariffs on dozens of countries deemed to have unfavorable trade imbalances with America. Although these tariffs, imposed under the International Emergency Economic Powers Act, were ultimately invalidated by the U.S. Supreme Court in February 2026, they boosted consumer prices throughout 2025 (i.e., a “Trump bump”) and led to a modest increase in Social Security’s 2026 COLA.
In 2026, two of President Trump’s policies are directly influencing consumer prices, which will ultimately determine the size of the raise Social Security beneficiaries receive next year.
For a second consecutive year, the president’s tariffs are playing a role. Despite the Supreme Court nixing Trump’s Liberation Day tariffs, the Trump administration has reimposed sweeping global tariffs on more than 80 countries using Section 301 of the Trade Act of 1974.
Assigning duties to select imported goods can increase domestic production costs and raise consumer prices, just as it did in 2025.
The Trump-led Iran war is the other major policy that’s directly affecting consumer prices. Not long after the president approved military action against Iran on Feb. 28, the latter shut down the Strait of Hormuz to most commercial vessels. This action stymied the flow of a fifth of the world’s crude oil supply, sending fuel prices to the moon.
We’re also beginning to see evidence that Trumpflation (inflation driven specifically by the president’s policies) is ingraining itself in the U.S. economy.
Image source: Getty Images.
Social Security’s 2027 raise should be unique in a variety of ways
Although President Trump’s policies come with unintended consequences for America’s leading retirement program, Social Security’s 2027 COLA is nevertheless on track to be historic.
The first notable effect of a second straight year with a Trump bump can be seen in the sheer magnitude of next year’s projected raise. Following the release of the July inflation report, The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, updated its 2027 COLA projection to 3.6%. Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson refreshed her 2027 COLA estimate to 3.4%.
At the average of these two estimates (3.5%), Social Security beneficiaries would enjoy a tie for the seventh-largest percentage increase in benefits since 1992. If TSCL’s higher forecasted raise of 3.6% proves accurate, it would mark a tie for the sixth-largest percentage increase in benefits spanning 36 years.
A second way Social Security’s Trump bump-led 2027 COLA can make history is by continuing a streak of above-average raises.
Throughout the 2010s, Social Security COLAs were anemic. Three years of deflation (2010, 2011, and 2016) resulted in no COLA being passed on to beneficiaries, while 2017 marked the smallest positive raise in history (0.3%). The 2020s have, thus far, been a welcome change for program recipients.
Over the last five years, Social Security COLAs have clocked in at 5.9% (2022), 8.7% (2023), 3.2% (2024), 2.5% (2025), and 2.8% (2026). The 8.7% raise in 2023 was the highest on a percentage basis since 1982. If Social Security’s 2027 COLA reaches 3.4% to 3.6%, it would represent a sixth consecutive year with an above-average payout increase. The last time Social Security benefits grew by at least 2.5% for six straight years was three decades ago (1988-1997).
But the third potential history-making moment for Social Security’s 2027 COLA may be the most profound. For select retired-worker beneficiaries, next year’s raise is set to come with a rare silver lining.
Close to half of all retired-worker beneficiaries are enrolled in traditional Medicare, which is comprised of Part A (in-hospital stays), Part B (outpatient services), and Part D (prescription drugs). While Part A has no cost for approximately 99% of retirees, Part B has a standard monthly premium ($202.90 in 2026). This premium is usually deducted from a retiree’s monthly Social Security payout.
Throughout much of the 21st century, Part B premiums have consistently soared at a faster pace than Social Security COLAs. Over the last three years, the Part B standard premium has risen by 5.9% (2024), 5.9% (2025), and 9.7% (2026). Rapidly rising healthcare premiums have somewhat or fully offset Social Security COLAs for tens of millions of retired-worker beneficiaries.
However, the 2026 Medicare Trustees Report calls for Medicare’s Part B premium to rise by 3.25% next year. If accurate, it would mark the first time since 2023 that Social Security’s COLA will increase (based on independent estimates) at a faster pace than Medicare’s Part B standard premium. In other words, retired-worker beneficiaries who are enrolled in traditional Medicare should retain more of next year’s COLA.
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