Social Security's 2027 COLA Has a Massive Wildcard, Courtesy of President Donald Trump

The big day for Social Security's more than 71 million traditional beneficiaries is less than one week away. On Wednesday, Oct. 14, at 08:30 a.m. ET, the U.S. Bureau of Labor Statistics will publish the September inflation report, providing the final data point needed to calculate Social Security's 2027 cost-of-living adjustment (COLA).

Social Security's COLA can be best thought of as the near-annual raise beneficiaries receive to counter the effects of inflation over the previous year. If the cost for a large basket of goods and services rises, Social Security benefits would need to climb by the same percentage to avoid a loss of purchasing power.

Image source: Official White House Photo by Joyce N. Boghosian.

For 2027, retired workers, workers with disabilities, and survivor beneficiaries are on track to receive one of the largest COLAs over the last 35 years. How big, exactly, will be determined by Social Security's wildcard: Trumpflation.

This could be one of the largest Social Security raises since 1993

While inflation (rising prices) is perfectly normal in a growing economy, a pair of President Donald Trump's policies has pushed the prevailing inflation rate to multiyear highs.

President Trump's tariff and trade policy has played a mild but persistent role in boosting consumer prices for more than a year. Adding duties to unfinished imported goods, such as steel, can increase domestic production costs and lift consumer prices.

But the real wildcard for Social Security's 2027 raise concerns the Trump-led Iran war.

Not long after military operations against Iran commenced on Feb. 28, the latter closed the Strait of Hormuz to virtually all commercial vessels. This disrupted the daily flow of 20 million barrels of petroleum liquids and sent energy prices soaring.

US Diesel prices hit another record high today at $6.53/gallon, up 74% since the Iran war began.

The damage from skyrocketing diesel prices won’t stop at the pump.

Higher freight, farming & shipping costs will ripple through the entire economy, raising consumer prices on almost… pic.twitter.com/d4KU1QDeWx

— Charlie Bilello (@charliebilello) September 24, 2026

Although the prospect of a U.S.-Iran peace deal temporarily eased fuel prices in June and July, diesel prices skyrocketed to a record high on Sept. 22. Surging fuel prices are the real unknown for the upcoming September inflation report and could lift Social Security's 2027 COLA above current forecasts.

After the August inflation report was released on Sept. 11, The Senior Citizens League, a nonpartisan senior advocacy group, lowered its 2027 COLA forecast one-tenth of a percent to 3.5%. Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson upped her projection from 3.4% to 3.5%.

A 3.5% Social Security raise would equate to roughly $73 per month extra in 2027 for the program's nearly 55 million retired-worker beneficiaries and represent a tie for the sixth-largest COLA over the last 35 years.

But if energy commodity price increases show up in a big way in the September inflation report, a 3.6% or 3.7% cost-of-living adjustment isn't out of the question. A 3.7% raise would be the fifth-largest increase since 1993, surpassed only by COLAs of 4.1% (2006), 5.8% (2009), 5.9% (2022), and 8.7% (2023).

US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts

However, outsize Social Security COLAs aren't all fun and games. Given the precarious financial state in which America's leading program entered 2026, a larger-than-normal raise risks draining the Old-Age and Survivors Insurance trust fund's (OASI) asset reserves faster than forecast. Instead of the OASI depleting its asset reserves by the fourth quarter of 2032, an outsize COLA caused by Trumpflation may accelerate the need for sweeping Social Security benefit cuts.

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