How Today's Higher Gas Prices Could Lead to a Larger 2027 Social Security Cost-of-Living Adjustment (COLA)
Key Points
High gas prices have driven inflation up.
This could lead to a larger Social Security COLA next year.
Your benefit boost will go toward rising living expenses, not enhancing your lifestyle.
- The $23,760 Social Security bonus most retirees completely overlook ›
Heading to the gas station has gotten a lot more painful over the last few months, with the current national average sitting at $4.459 per gallon, up from $3.174 a year ago, according to the American Automobile Association. These higher prices aren't likely to end anytime soon, forcing many Americans to make some uncomfortable financial choices.
There could be a small silver lining in there for seniors on Social Security, though. Here's how higher prices at the pump could lead to more Social Security benefits for you in 2027.
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High inflation leads to high Social Security COLAs
The Social Security Administration looks at changes in average third-quarter inflation to determine its cost-of-living adjustment (COLA) for the next year. For example, the 2025 third-quarter average was 2.8% higher than the 2024 third-quarter average, so seniors got a 2.8% benefit boost in 2026.
The third quarter of 2026 hasn't even begun yet, so we're still several months away from the official 2027 COLA announcement. That's slated for Oct. 14, 2026. But that hasn't stopped people from trying to predict where the COLA will end up by looking at current trends.
Earlier this year, the 2027 COLA was expected to come in close to the 2.8% bump seniors saw this year. But rising inflation, largely driven by higher energy costs, has changed a lot of minds. The Senior Citizens League, a nonpartisan senior group, has raised its 2027 COLA projection to 3.9%, up from 2.8% a month ago.
This is a pretty sizable jump and reflects growing concerns about inflation and whether it will continue to rise over the coming months. If it does, the 2027 COLA may come in even higher than current estimates, but it's not all good news.
Don't expect a life-changing COLA
High COLAs indicate that living costs are rising. So the extra money you receive will probably go toward covering these additional costs rather than raising your standard of living.
Some people find that COLAs aren't adequate to cover their rising costs, and they may need to rely more heavily on personal savings or income from a job next year. The 2027 COLA, which takes effect in January, also won't be able to help you with rising expenses throughout the rest of 2026.
Currently, the best thing you can do is diversify your retirement income sources so you're not as dependent on your Social Security checks. Then, when the government announces the 2027 COLA, you can start to build a new budget for next year.
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