Key Points
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Social Security’s 3.6% cost-of-living adjustment in 2027 ties for the fifth-largest raise over the last 35 years.
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Two of President Donald Trump’s policies played a prominent role in delivering this outsize raise.
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However, larger-than-normal Social Security COLAs are shaking the program’s financial foundation to its core.
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The day more than 71 million traditional Social Security beneficiaries have been waiting for arrived last week. On Wednesday, Oct. 14, the U.S. Bureau of Labor Statistics published the September inflation report, providing the final data point needed for the Social Security Administration to calculate and announce the 2027 cost-of-living adjustment (COLA).
Social Security’s COLA represents the near-annual raise given to beneficiaries to combat inflation (rising prices). If Social Security payouts didn’t rise in lockstep with inflation, beneficiaries would lose buying power over time.
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Social Security’s 2027 raise is among the largest over the last 35 years, thanks in part to President Donald Trump’s policies. But while this Trump bump will lead to an outsize benefit boost for recipients in the upcoming year, it comes at a potentially steep cost to Social Security’s solvency.
The fifth-largest Social Security raise since 1993 is on its way
Heading into the announcement, independent estimates from The Senior Citizens League, a nonpartisan senior advocacy group, and Mary Johnson, a Social Security and Medicare policy analyst, had both narrowed to 3.5%. Social Security’s reported 2027 COLA clocked in slightly above both estimates at 3.6%.
A 3.6% COLA ties for the fifth-largest annual raise since 1993, with payout increases of 4.1% (2006), 5.8% (2009), 5.9% (2022), and 8.7% (2023) topping it.
It’s also the sixth straight year in which benefits have grown by at least 2.5%. The last time Social Security COLAs grew at or above average for six consecutive years was late last century, from 1988 through 1997.
The average retired-worker beneficiary will see their monthly check rise by $75 in 2027. Meanwhile, the typical worker with a disability and survivor beneficiary will receive an extra $59 per month in the coming year.
President Trump’s policies are boosting Social Security’s COLA and inflation
Though everyone loves a larger monthly benefit, the only reason payouts are climbing so quickly is that the prevailing inflation rate is elevated. In May, the annualized inflation rate hit a three-year high of 4.2%.
Some degree of inflation is perfectly normal when the U.S. economy is growing — but we’re well beyond the point of modest inflation at the moment.
Some of the catalysts responsible for boosting inflation have nothing to do with President Trump. For instance, the insatiable demand for artificial intelligence (AI) infrastructure, coupled with ongoing supply shortages of AI hardware, has increased consumer prices.
However, some of the most visible inflationary pressures, and the reason Social Security’s COLA is among the largest since 1993, directly trace to Donald Trump’s policies.
For example, Trump’s tariff and trade policy is decisively pushing up consumer prices for a second consecutive year.
In a perfect world, tariffs would protect American jobs, encourage businesses to produce in the U.S., and make American-made goods more price-competitive with imported products. However, adding duties to imported goods used to complete the manufacture of a product domestically can increase production costs, which businesses then pass on to consumers.
A recently published report (“How Fast Do Tariffs Pass Through into Consumer Prices”) by three New York Federal Reserve economists writing for Liberty Street Economics found that Trump’s tariffs have increased goods price inflation by 2.9 percentage points, as of February 2026.
The other prime inflation catalyst is the Trump-led Iran war. Not long after this conflict began, Iran closed the Strait of Hormuz to most commercial vessels. This action disrupted the flow of roughly one-fifth of the world’s crude oil supply, sending fuel prices soaring.
While Donald Trump isn’t solely responsible for next year’s outsize Social Security raise, his policies are the most visible catalyst.
Image source: Getty Images.
Outsize Trump bumps can weaken Social Security’s financial foundation
President Trump’s inflation-driving policies are also threatening the solvency of Social Security’s Old-Age and Survivors Insurance trust fund (OASI).
Before digging any deeper, let’s state an important fact: Social Security is in no danger of going bankrupt or halting benefits. America’s leading retirement program collects more than 91% of its annual income from the 12.4% payroll tax on wages and salaries. As long as Americans keep working, there will always be income to disburse to eligible beneficiaries.
But the solvency of the existing payout schedule, including annual COLAs, is very much at risk. According to the 2026 Social Security Board of Trustees Report, the OASI’s asset reserves are projected to be gone by the fourth quarter of 2032. Even though the OASI doesn’t need a penny in its asset reserves to continue doling out benefits to retired workers and survivors of deceased workers, the depletion of this excess income would necessitate sweeping benefit cuts currently estimated at 22%.
US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts
Here’s where things get dicey.
The Trustees account for a long list of variables when making their projections. This includes birth and death rates, net migration rates, wage growth, inflation, and even annual COLAs. The Trustees Report assumes that annual Social Security raises will be relatively modest. However, the Trump bump-led 2027 COLA is well above average.
Although we’ll likely have to wait for the 2027 Social Security Board of Trustees Report for the next update, the odds have risen considerably that two consecutive years of outsize COLAs, driven primarily by Trump bumps, will deplete the OASI’s asset reserves even faster than forecast.
In other words, the projected timeline to sweeping Social Security benefit cuts has likely accelerated, thanks in part to President Trump’s policies.
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