A ‘Trump Bump’ to Social Security Is Coming in 2027—With a Catch

On Wednesday, the Social Security Administration announced that Social Security benefits will go up 3.6% in 2027, about $75 a month for the average retired worker.

But the increase exists only because everyday costs have climbed, and for retirees who own homes, expenses from heating oil to utilities may be rising faster than the adjustment.

The cost-of-living adjustment, or COLA, takes effect almost every year to account for inflation—and this adjustment is one of the biggest in years. 

Some financial commentators have dubbed it a “Trump bump.” However you frame it, recipients should look closely at what the increase will actually cover, especially those who rely on their payments for the costs of homeownership.

The details of the COLA

About 76 million Americans receive either Social Security or Supplemental Security Income, or both. 

Each year, the SSA reviews government inflation data—specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)—and calculates how much to increase those benefits to reflect the changing cost of living, from the price of food and transportation to healthcare and housing. Beneficiaries will start seeing the increase in their January 2027 checks. 

Energy was the main driver of costs in September. Gasoline prices are up 34.2% from a year ago, and the energy index is up 20.4%, according to the Bureau of Labor Statistics. Home energy costs are climbing, too: Fuel oil, which heats many Northeast homes, is up 74.2%; natural gas is up 5.0%; and electricity is up 4.4%. 

The New York Times reported that inflation over the past year has also been pushed up by the war in Iran, President Donald Trump’s tariffs, and the cost of the AI buildout.

White House National Economic Council Director Kevin Hassett told Fox Business the September inflation report was “disappointing,” but said “the energy shock is really the headline story,” according to the Times.

Is this ‘Trump bump’ enough? 

The Motley Fool calls the COLA a “Trump bump.” And if you ask the White House, this increase in benefits is the federal government meeting the needs of the American people. 

“Social Security will implement this cost-of-living adjustment for 76 million Americans, giving them greater financial stability,” said Social Security Commissioner Frank J. Bisignano in a press release. “Under President Donald J. Trump, Social Security is delivering better, faster, higher-quality service for the American people."

But a COLA is not like getting a raise. The increase is meant to match what consumers are already paying in rising costs. And some people think this increase still won’t be enough. 

“Any increase in Social Security benefits is helpful, but I don't believe a [3.6%] adjustment will come close to providing meaningful financial relief for many retirees,” says Adam Bergman, a tax and ERISA attorney and the founder of IRA Financial.

“That's not much when virtually everything you spend money on seems to cost more every year. In my opinion, retirees are still losing purchasing power, even with the COLA increase.”

Bergman says that using the CPI-W to assess each year’s COLA is flawed, as it’s based on the spending of urban wage earners and clerical workers—who spend much differently than retired Americans do. 

“Medicare premiums, supplemental insurance, prescription drugs, deductibles, and other out-of-pocket medical expenses can consume a significant portion of a retiree's income,” says Bergman. “Rising Medicare premiums and other healthcare expenses could absorb a meaningful portion of that increase. And remember, healthcare is just one expense.” 

How the COLA could affect homeownership 

Retired Americans often rely on Social Security benefits to help cover the ongoing costs of homeownership, which means it’s important not to overestimate the impact that this COLA could have on expenses. 

“Social Security can help older homeowners pay some of these basic costs associated with homeownership. Although they’ve likely paid off their mortgage, they still need to pay for things like insurance, taxes, utility bills, and home repairs,” says Rami Sneineh, owner and co-president of Insurance Navy Brokers.

The COLA helps, but for many homeowners it won’t close the gap. A Realtor.com® analysis from September 2025 found that even with the mortgage paid off, median Social Security benefits covered a retiree’s living costs in just 10 states. Nationally, the average shortfall was about $2,762 a year, or roughly $230 a month, and it ran as high as $8,088 in Vermont and $7,248 in New York. Property taxes, insurance, and utilities were among the biggest drivers.

By comparison, the $75 monthly increase for the average retiree works out to about $900 a year, roughly a third of that national shortfall, before accounting for another year of rising costs.

For example, the cost of insurance is soaring, and it may be tempting to find ways to cut costs that include reducing coverage. But the immediate savings could be offset by an emergency that happens at any time. 

“Cutting back on coverage you rarely use can look very helpful because it gives you immediate savings, but the moment when you need it, say from a kitchen fire or a leak in the roof or damage from a storm, you may be out thousands of dollars,” says Sneineh. “Instead of doing that, compare insurers and look for all the discounts available to you.”

Retirees are more than familiar with living on a budget and knowing where their money goes each month. But until inflation is under control, extra care must be taken to avoid financial pitfalls such as insurance lapses, tax liens, or even foreclosure.

“My advice is to ignore the headline COLA percentage for a moment and focus on your actual household expenses,” says Bergman. “Look at what you spent on groceries, housing, healthcare, utilities, gas, travel, and entertainment last year compared to what you expect to spend in 2027. I suspect many retirees will discover that their personal inflation rate is considerably higher than 3.5%.”