The 2027 Social Security COLA Is Coming Into Focus: How Inflationary Trump-Era Policies Could Push Social Security Benefits Higher Next Year

We're just a few weeks away from learning one of the most important numbers that will affect the finances of more than 71 million Americans in 2027. The annual Social Security cost-of-living adjustment, or COLA, for next year will be determined on Oct. 14 this year.

The COLA is designed to offset the impact of inflation on monthly Social Security benefits, ensuring that retirees and people with disabilities have enough to help make ends meet. President Donald Trump has enacted several policies that have affected Social Security, but several inflationary policy decisions made since he took office in early 2025 could have a notable impact on the 2027 COLA. In fact, next year's COLA could be one of the highest during the past 15 years.

Here's what it means for Social Security beneficiaries.

Image source: Official White House. Photo by Molly Riley.

Trump's policies added to inflation

The annual COLA is based on a measure of inflation known as the CPI-W. The CPI-W tracks a basket of goods that represent the average spending of an urban wage earner or clerical worker in the U.S. It's slightly different than the more commonly reported CPI-U, which is meant to cover a broader group of all urban consumers.

The Social Security Administration uses the average year-over-year increase in the CPI-W reading during the third quarter of each year to determine the COLA for the following year. That means it won't determine the exact COLA until the September reading is released on Oct. 14.

We currently have only one of the three data points needed to determine the COLA, and the next one will arrive on Sept. 11. So far, Trump's policies have had a noticeable impact on inflation this year, which could lead to a substantial COLA.

The first policy driving inflation higher is the president's tariffs. Although the administration's initial wave of tariffs took effect more than a year ago, they're still pushing up prices. That's despite the Supreme Court striking down those tariffs as illegal. Many businesses waited to pass on the increased costs to consumers, but now that they have, they're not rolling back prices.

Trump has continued to find new ways to impose tariffs on many goods, and he recently imposed steep tariffs on Canadian imports. Those tariffs took effect in August and could affect prices and inflation measures in September.

The second major policy decision affecting inflation is the unresolved Iran war, launched by Trump at the end of February. The attacks led Iran to restrict navigation through the Strait of Hormuz, cutting off global oil supply as well as key chemicals and materials shipped through the strait. That increased prices across the board, as energy is a necessary input for almost everything in the economy.

The U.S. and Iran have recently escalated the conflict, a trend already reflected in oil futures and gas prices. That could lead to a higher-than-anticipated inflation reading in September.

The 2027 COLA could be another big one

There are several expert projections for next year's COLA to consider. But as we get more data, the range of possible outcomes is narrowing.

The Federal Reserve Bank of Cleveland provides a forecast of inflation for the current month (and the previous month if it hasn't yet been reported). While it focuses on the CPI-U, the CPI-W reading typically moves in line with the broader reading. Its current forecast calls for inflation to climb 3.4% in both August and September. If that proves accurate, the 2027 COLA will likely be 3.4%.

That projection is in line with analyst Mary Johnson's expectations after digesting July inflation numbers. She had previously projected 3.7% in July but just 1.2% at the start of the year.

The AARP projects the COLA could come in at 3.5%, suggesting faster price increases in August and September than in July. And the Senior Citizens League estimates the 2027 COLA could be 3.6%. That's up from its January projection of 2.6%.

Even if the COLA comes in at the low end of those projections, it's set to be the fourth-highest annual increase since 2010. At the high end, it will tie for third. Only 2022 and 2023, when the country experienced a burst of intense inflation, would be higher.

But as anyone who's dealing with higher prices today knows, a big COLA isn't all it's cracked up to be. Social Security beneficiaries have to deal with accelerating inflation today before they receive the commensurate benefits boost next year. That can add a lot of financial strain. Beneficiaries should hope for policies that lead to slow, stable inflation, something we haven't seen in years.

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