Social Security's Trump Bump-Powered 2027 COLA Is the 5th Largest in 35 Years, but It Comes at a Potentially Steep Cost

In October, the Social Security Administration revealed a significant cost-of-living adjustment (COLA) of 3.6% for 2027, the fifth-largest increase in the past 35 years. This raise, attributed to President Trump's policies, will benefit over 72 million beneficiaries, with an average monthly increase of $75 for retired-worker beneficiaries and $59 for average workers with disabilities and survivors.

The COLA surge is primarily driven by "Trumpflation," or inflation directly caused by President Trump's policies. The president's tariff and trade policies, including the recent Iran war, have contributed to the inflation rate, resulting in the COLA increase. While the raise is necessary to keep up with rising inflation, the outsize COLA comes with potential consequences for Social Security.

For more than four decades, the Social Security Board of Trustees has warned of the program's long-term unfunded obligation. The latest report estimated this unfunded obligation to be a staggering $29.3 trillion. However, the more immediate concern is the expected depletion of the Old-Age and Survivors Insurance trust fund's assets by the fourth quarter of 2032. If the trust fund runs out of reserves, significant benefit cuts of up to 22% may be required to sustain payouts.