Social Security's Historic 2027 COLA Just Disappeared, but the Program's First Silver Lining Since 2023 Remains on Track

Making history is something America's leading retirement program, Social Security, does often. Last year marked the program's 90th anniversary since being signed into law, as well as the first time the average monthly retired-worker benefit surpassed $2,000.

Based on monthly inflation reports through May, it appeared as if Social Security's 2027 cost-of-living adjustment (COLA) would be historic. Social Security's COLA is essentially the annual "raise" given to beneficiaries to offset the effects of inflation (i.e., rising prices).

However, the June inflation update completely shifted the trajectory of next year's COLA. Nevertheless, a consolation prize that hasn't occurred since 2023 is still on track for select seniors in 2027.

Image source: Getty Images.

Social Security's projected "Trump bump" is shrinking

Social Security benefits rose 2.8% this year, driven in part by President Donald Trump's decision to implement sweeping global tariffs and higher reciprocal tariffs on select countries in April 2025. Even though the U.S. Supreme Court invalidated many of these tariffs in February 2026, they provided a boost to prices and gave Social Security's 2026 COLA a "Trump bump."

For a second consecutive year, albeit for a different reason, Social Security's COLA is in line for a Trump bump.

On Feb. 28, the president gave the green light for the U.S. military to commence attacks on Iran. Not long after these attacks began, Iran closed the Strait of Hormuz to most maritime traffic. In doing so, Iran choked off roughly one-fifth of the world's global crude oil demand and sent energy prices soaring. Between February and May, trailing 12-month (TTM) U.S. inflation soared from 2.4% to a three-year high of 4.2%.

Following the May inflation report, independent Social Security and Medicare policy analyst Mary Johnson boosted her 2027 COLA projection to 4.7%. If accurate, this would have marked the fourth-largest percentage increase in Social Security benefits since 1991.

But the June inflation report, released on July 14, changed everything.

BREAKING: June CPI inflation falls to 3.5%, below expectations of 3.8%

Core CPI inflation falls to 2.6%, below expectations of 2.8%.

Month-over-month CPI inflation fell -0.4%, the biggest monthly drop since May 2020.

US stock market futures are surging on the news.

-- The Kobeissi Letter (@KobeissiLetter) July 14, 2026

While independent estimates remain fluid and could change if the Strait of Hormuz stays closed, a steep decline in crude oil prices in June pushed TTM inflation down to 3.5%. In turn, Johnson drastically cut her 2027 Social Security COLA forecast to 3.7%.

Although a 3.7% raise would still be among the largest over the last three decades, calling it a historic Trump bump would be a bit of a stretch.

If Johnson's estimate proves accurate, the average retired worker can expect their monthly payout to rise by $77. Meanwhile, the average worker with a disability and the typical survivor beneficiary would see their monthly benefits each climb by about $60 next year.

However, a more modest Trump bump than was forecast last month is only half the story.

Image source: Getty Images.

A rare silver lining is still in the cards for some Social Security retirees in 2027

Though Social Security beneficiaries have received a raise almost every year since 1975, retirees have been losing purchasing power on a fairly regular basis since the start of this century.

In July 2024, nonpartisan senior advocacy group The Senior Citizens League published an analysis that found seniors had lost 20% of their Social Security income buying power from 2010 to 2024. This relatively steady loss of purchasing power stems from inherent flaws built into Social Security's inflationary index, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

The issue with the CPI-W is evident in its full name. Whereas 87% of traditional Social Security beneficiaries were 62 or older as of December 2025, the CPI-W is focused on the spending habits of "urban wage earners and clerical workers." These are typically working-age Americans (i.e., under the age of 62) who aren't currently receiving a Social Security retired-worker benefit. The expenses that matter most to aging workers, such as shelter and medical care services, aren't being properly weighted in the CPI-W to reflect the inflation they're facing.

In addition to the CPI-W's inherent shortcomings, rapidly rising Medicare Part B premiums have been offsetting Social Security COLAs for much of the century. Part B is the segment of traditional Medicare responsible for outpatient services.

Over the last three years (2024-2026), Medicare's Part B premium has risen by 5.9%, 5.9%, and 9.7%, respectively. In comparison, Social Security's COLA for these same years is 3.2%, 2.5%, and 2.8%. For traditional Medicare enrollees who are also receiving a monthly retired-worker benefit from Social Security, Part B is offsetting some or all of their annual COLA.

But there's a silver lining brewing in 2027.

According to the latest Medicare Trustees Report, the estimated standard Part B premium for the upcoming year is $209.50 per month. That's up $6.60 per month from 2026, or 3.25% on a percentage basis. The last time Social Security benefits increased at a faster percentage than the Part B premium was 2023, when Part B premiums actually declined!

Once again, there remains a lot of fluidity to Social Security's 2027 COLA estimate and the final Medicare Part B standard premium. But as things stand right now, Social Security's estimated 2027 COLA will allow some retirees to retain more of their raise next year and ever-so-slightly chip away at decades of lost Social Security income purchasing power.

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