A Second Consecutive Trump Bump Has Social Security'…

Social Security’s 2027 raise will be influenced by President Trump’s policies

Some degree of inflation is perfectly normal for an expanding economy. When the U.S. economy is firing on all cylinders, businesses typically possess a modest level of pricing power over their goods and services. Even the Federal Reserve recognizes that modest inflation is inevitable in a growing economy, which is why it’s targeting long-term inflation of 2%.

But the 2.8% cost-of-living adjustment passed on to Social Security beneficiaries in 2026 had something unique propelling it: a Trump bump.

In April 2025, President Trump unveiled his Liberation Day tariffs, consisting of sweeping global tariffs and dozens of higher reciprocal tariffs on countries with unfavorable trade imbalances with America. Even though the U.S. Supreme Court struck down these tariffs in February 2026, their imposition throughout much of 2025 provided a modest lift to consumer prices. This increased the prevailing inflation rate and boosted Social Security’s 2026 COLA.

In 2027, two of President Trump’s policies are set to influence Social Security’s raise: tariffs and the Iran war.

BREAKING: July CPI inflation falls to 3.4%, in-line with expectations of 3.4%

Core CPI inflation falls to 2.5%, also in-line with expectations of 2.5%.

Month-over-month CPI inflation rose +0.1%, up from -0.4% in June.

US stock market futures are rising on the news.

— The Kobeissi Letter (@KobeissiLetter) August 12, 2026

Although the Supreme Court invalidated the president’s Liberation Day tariffs, he and his administration have used a new justification to impose sweeping global tariffs ranging from 10% to 12.5% on more than 80 countries. Adding duties to unfinished imported goods, such as steel, can increase domestic manufacturing costs, leading to higher prices for consumers. In other words, the same variable that gave Social Security a Trump bump in 2026 will also be influencing its raise in 2027.

Additionally, the Trump-led Iran war is having a direct impact on the prevailing inflation rate. Iran’s closure of the Strait of Hormuz has disrupted the flow of approximately one-fifth of the world’s petroleum liquids. While the most immediate impact of this closure has been higher fuel prices, evidence is mounting that the inflationary effects of the Iran war have reached the broader economy.

According to an updated forecast from The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, Social Security’s 2027 COLA is expected to be 3.6%. Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson is calling for a 3.4% increase to benefits next year.

On top of this projected raise being well above the average COLA over the last two decades, it would mark a sixth straight year with at least a 2.5% payout boost. The last time recipients saw their Social Security benefits climb by at least 2.5% for six consecutive years was three decades ago (1988-1997).

Image source: Getty Images.

Social Security’s 2027 COLA comes with a promising silver lining for select retirees

But an above-average cost-of-living adjustment and a payout streak that hasn’t been witnessed in three decades is just part of the story. Social Security’s Trump bump should also deliver a silver lining to tens of millions of select retirees in the upcoming year.

Throughout the years, TSCL has published several reports detailing the shortcomings of Social Security’s annual COLA. A July 2024 report found that the buying power of a Social Security dollar had declined by 20% from 2010 to 2024.

Some of this decline is structural. For example, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) — the inflationary measure used to calculate the program’s annual COLA — has inherent flaws. Even though 87% of traditional Social Security beneficiaries are 62 or older, the CPI-W is tracking the cost pressures for “urban wage earners and clerical workers,” many of whom are younger than 62 and still in the labor force.

Another significant issue that eats away at retirees’ annual COLA is Medicare’s Part B premium.

Traditional Medicare consists of three segments: Part A (in-hospital stays), Part B (outpatient services), and Part D (prescription drugs). While 99% of working Americans won’t pay a cent for Part A, there’s a standard monthly premium for Part B of $202.90 in 2026. This premium is usually deducted from a retired worker’s monthly Social Security benefit.

BREAKING: 71 million Social Security beneficiaries will see a 2.8% cost-of-living adjustment (COLA) beginning in January 2026. The average annual increase over the last decade: 3.1%.https://t.co/l5IYmkf6Ih pic.twitter.com/pgqtPLgqMB

— Charlie Bilello (@charliebilello) October 24, 2025

Since the start of this century, the average annual percentage increase in Part B premiums has pretty consistently outpaced Social Security’s annual COLA. Whereas Social Security payouts have grown by 3.2% (2024), 2.5% (2025), and 2.8% (2026) over the last three years, Medicare’s Part B premium has soared by 5.9% (2024), 5.9% (2025), and 9.7% (2026), respectively. These costs are undeniably contributing to this seemingly persistent loss of Social Security income purchasing power.

Next year’s projected Trump bump offers a promising silver lining. If we take the average of TSCL’s and Johnson’s forecasts, Social Security’s raise is estimated at 3.5%.

Meanwhile, the 2026 Medicare Trustees Report predicts that Medicare’s Part B premium will jump 3.25% to $209.50/month in the upcoming year. If accurate, this’ll mark the first time since 2023 that Social Security’s COLA will increase by a higher percentage than Medicare’s Part B premium. The result being that tens of millions of retirees with traditional Medicare will retain more of next year’s raise.