Social Security's Historic 2027 COLA May Have a Silver Lining for the First Time Since 2023

Last year, Social Security celebrated its 90th anniversary, and the average monthly retired-worker benefit surpassed $2,000 for the first time. Making history is commonplace for America's most important retirement program.

But for the more than 71 million people who took home a traditional Social Security benefit in May -- retired workers, workers with disabilities, and survivors of deceased workers -- there's arguably no annual announcement more anticipated than the cost-of-living adjustment (COLA).

Social Security's COLA, announced during the second week of October, is the annual "raise" that accounts for the inflationary pressures beneficiaries are facing. Hypothetically, if prices for a broad basket of goods and services regularly purchased by Social Security recipients rose by 3% and payouts remained static, beneficiaries would lose buying power over time.

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Since most retirees rely on their Social Security income, in some capacity, to make ends meet, knowing how much they'll receive monthly in the upcoming year is of the utmost importance. In 2027, Social Security's COLA is on pace to be historic -- and for the first time in four years, it may also come with a silver lining for select retirees.

Social Security payouts are in line for a "Trump bump"

This year's Social Security raise of 2.8% was historic in its own way. Although a 2.8% payout increase is relatively modest compared to other COLAs since 1975, it marked the fifth consecutive year that payouts rose by at least 2.5%. That's a feat we haven't witnessed in nearly three decades.

The catalyst behind Social Security's 2.8% COLA in 2026 was a "Trump bump."

In April 2025, President Donald Trump unveiled his tariff and trade policy, featuring sweeping global tariffs and higher reciprocal tariffs on dozens of countries deemed to have adverse trade imbalances with America. Even though the U.S. Supreme Court overturned most of these tariffs in a February 2026 ruling, they increased prices for some U.S. manufacturers, leading to a modest uptick in U.S. inflation (i.e., a Trump bump).

In 2027, Social Security is looking at its second consecutive year of Donald Trump's policies boosting the COLA.

On Feb. 28, Trump ordered the U.S. military to attack Iran. Shortly thereafter, Iran closed the Strait of Hormuz to most commercial vessels, effectively halting the flow of a fifth of the world's daily supply of petroleum liquids.

BREAKING: May CPI inflation rises to 4.2%, the highest level since April 2023.

Core CPI inflation also rises to 2.9%, the highest since September 2025.

Inflation in the US is officially back above 4% and more than double the Fed's target.

Odds of Fed rate hikes are rising.

-- The Kobeissi Letter (@KobeissiLetter) June 10, 2026

Trump's action created the largest modern-day disruption to energy supply and briefly sent energy prices to the heavens. Between February and May, trailing 12-month inflation surged from a modest 2.4% to a three-year high of 4.2%.

Given that Social Security's COLA is designed to offset the effects of inflation, a multiyear high for inflation means a projected multiyear high for next year's raise.

Following the May inflation report, nonpartisan senior advocacy group The Senior Citizens League (TSCL) adjusted its 2027 COLA forecast to 3.8%. Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson lifted her COLA projection to 4.7% in 2027. For context, Johnson had been forecasting a 1.7% COLA for 2027 following the February inflation report.

If Johnson's estimate of a 4.7% raise in 2027 proves accurate, it would mark the fourth-largest cost-of-living adjustment over the last 36 years.

Image source: Getty Images.

An ultra-rare silver lining appears to be in the cards for some Social Security retirees

However, the payout increase passed on to beneficiaries only tells half the story.

For much of this century, retirees have received the short end of the stick. Though Social Security benefits have modestly risen over time, analyses have shown that inflationary pressures on the goods and services they purchase have been even greater.

For example, TSCL issued a report in July 2024 comparing the aggregate COLAs retirees received from 2010 to 2024 with the cumulative inflation they've faced for some of the most commonly purchased goods and services. According to TSCL, the purchasing power of Social Security income has plunged by 20% since 2010.

Part of the blame lies with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This is the inflationary yardstick used to calculate Social Security's annual COLA.

As its name implies, the CPI-W focuses on the cost pressures faced by "urban wage earners and clerical workers." These are typically working-age Americans who aren't currently receiving a Social Security retired-worker benefit. Even though 87% of Social Security recipients are aged 62 and older, the program tracks the spending habits of Americans who spend their money differently than seniors.

Additionally, Social Security retirees who are enrolled in traditional Medicare have seen their COLAs regularly gobbled up by sky-high Part B premium increases. Part B is the segment of Medicare responsible for outpatient services.

Over the last three years, Part B premiums rose by 5.9% (2024), 5.9% (2025), and 9.7% (2026), respectively, while Social Security COLAs have jumped by just 3.2% (2024), 2.5% (2025), and 2.8% (2026). Since Part B premiums are commonly deducted from monthly Social Security payouts, a good portion of retirees haven't come close to receiving their full annual COLA.

But an ultra-rare silver lining awaits (at least as of now) in 2027.

According to the latest Medicare Trustees Report, initial estimates call for a $6.60/month increase to the standard Part B premium in 2027. On a percentage basis, we're talking about a 3.25% bump. While it's not a decline in the Part B premium, which occurred in 2023, it would mark the first time since 2023 that Social Security's COLA would increase by a larger percentage than the Part B premium.

For Social Security's retired workers who are enrolled in traditional Medicare, this would mean retaining more of their annual COLA and potentially even gaining ground, albeit fractionally, on the loss of purchasing power they've experienced throughout this century.

For the first time since 2023, retirees may have a silver lining to look forward to with their annual Social Security COLA.