MW 'Tip of the inflation iceberg': Social Security's COLA forecast rises to 3.2%

By Brett Arends

Consumer prices surged in March, thanks to conflict with Iran

Seniors won't get compensated until 2027 for the higher prices they have to pay now.

Social Security payments may have to rise as much as 3.2% to keep up with rocketing inflation, analysts now warn.

That cost-of-living adjustment, known as the COLA, would mean an extra $66.54 a month for the average retired worker, $31.55 for the average retired worker's spouse and $52.30 for the average disabled worker starting next year, according to the most recent data.

This follows March's massive surge in consumer prices, the result of the war against Iran. The Iranian regime responded to the bombardment of their country by effectively closing the Strait of Hormuz to oil tankers, potentially shutting off up to 20% of the world's energy supplies.

Prices as measured by the official consumer-price index rose last month by 0.87%, equivalent to a staggering annualized rate of 11%, the U.S. Bureau of Labor Statistics reports.

"This is the tip of the inflation iceberg," warns longstanding Social Security analyst Mary Johnson. "This represents the biggest single-month jump we've seen in inflation since 2022."

Based on the latest data, Johnson says the 2027 COLA is on track for a 3.2% rise. The Senior Citizens League, an independent nonprofit, puts the figure lower, at 2.8%.

During the 2022 inflation surge, Donald Trump, who was then out of office, and his Republican allies bitterly criticized President Joe Biden for the rise in prices, which partly resulted from the Russian invasion of Ukraine.

Wall Street believes the latest surge in inflation will make it harder for the Federal Reserve to cut short-term interest rates by much, if at all, this year from their current range of 3.5% to 3.75%. President Trump and Vice President J.D. Vance have been demanding for a year that the Fed slash rates drastically.

News that higher COLA payments may be coming is no cause for celebration among retirees. COLA increases simply mean their costs went up and they'll be getting some extra payments to compensate - a year later.

Those receiving Social Security won't find out the actual cost-of-living adjustment until October. The Social Security Administration will look at consumer prices this summer - in the months of July, August and September - and compare them with consumer prices in the same three months a year ago. In October it will announce the COLA for 2027, which will be reflected in Social Security checks that go out starting in January.

This means you have to wait until January 2027 before you see an extra nickel in compensation for the higher prices you are paying now.

That's not the only way higher inflation wallops seniors. Inflation is bad for savings. It's bad for bonds, and it's not great for stocks, either. Worries about inflation have caused some seniors to stampede into gold instead, even though that is highly speculative, functionally useless and pays no dividends at all.

Retirees are left hoping that the current cease-fire with Iran holds despite the continued Israeli attacks on Lebanon. The crisis has raised average gasoline prices to $4.15 a gallon and diesel to $5.68 a gallon, although there are signs that those may have peaked - for now.

-Brett Arends

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April 10, 2026 12:29 ET (16:29 GMT)

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