Key Points
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Social Security’s near-annual raise for beneficiaries will be announced on Oct. 14.
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President Donald Trump’s policies — specifically, the Iran war — are stoking inflation and boosting forecasts for Social Security’s 2027 cost-of-living adjustment (COLA).
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Social Security’s 2027 “Trump bump” could leapfrog independent estimates due to rapidly rising fuel prices.
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After a quarter-century of annual surveys by Gallup, one thing is for certain: Social Security income is vital to the financial well-being of our nation’s aging workforce. In just over one week, on Oct. 14, more than 71 million traditional Social Security beneficiaries, nearly 55 million of whom are retired workers, will know exactly how much their payouts will climb in 2027.
Social Security’s cost-of-living adjustment (COLA) is the near-annual raise given to recipients to combat inflation (rising prices). Without these payout boosts, Social Security income would lose purchasing power over time.
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Social Security’s 2027 COLA is shaping up as one of the largest of the last 35 years, thanks in large part to President Donald Trump’s policies. Based on economic data, Trumpflation (inflation that’s specifically driven by Trump’s policies) is accelerating, which could lead to the fifth-largest Social Security raise since 1993.
An energy-driven “Trump bump” may send Social Security’s raise well past 3.5%
After the release of the August inflation report on Sept. 11, The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, and Mary Johnson, an independent Social Security and Medicare policy analyst, both updated their 2027 COLA projections to a matching 3.5%. If TSCL and Johnson are correct, Social Security’s upcoming raise would tie for the sixth-largest since 1993.
Several factors are causing consumer prices to rise, including normal factors, such as businesses possessing modest pricing power over their goods and services in an expanding economy. But Trumpflation is playing a key role.
The president’s tariff and trade policy has been modestly lifting prices for more than a year. Assigning duties to unfinished imported goods, such as steel, can increase production costs for domestic manufacturers and lead to higher prices for consumers.
However, the more front and center issue is the Trump-led Iran war. Iran’s closure of the Strait of Hormuz has created a never-before-seen disruption in energy markets. Halting the maritime movement of approximately one-fifth of the world’s crude oil demand initially sent gas prices soaring at the fastest pace in three decades. More recently, we’ve witnessed diesel prices reach an all-time high of $6.53 per gallon.
Even though fuel is just one of a laundry list of inflation-measuring categories, the parabolic increases we’re seeing in gas and diesel in September could lift Social Security’s 2027 COLA above TSCL’s and Johnson’s 3.5% forecast.
Furthermore, economic data have begun showing evidence that Iran-war-driven inflation has reached the broader economy. Higher commercial shipping and freight prices, coupled with the higher costs of rerouting shipments and changing suppliers, are hitting consumers in their pocketbooks.
Higher energy costs and entrenched Iran-war-driven inflation may push Social Security’s 2027 COLA to 3.6% or 3.7%. A 3.6% COLA would tie for the fifth-largest since 1993, while a 3.7% Social Security raise, prompted by a second consecutive year with a “Trump bump,” would mark the fifth-biggest percentage increase in 35 years.
Nine more days until we know for certain.
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