Retirement Social Security

Social Security Payments Are Getting a Boost Due to the Iran War

The Iran War is contributing to higher Social Security payments in 2027.

By Chris Lewis, CEPF , Edited by Laura Hohenstein

Updated Oct. 29, 2026

Add Us On Google

Retirees who depend on Social Security senior benefits will see a bump in their checks for 2027, and the war with Iran could be a major reason behind the increase.

The Social Security Cost of Living Adjustment (COLA) is meant to ensure benefit amounts keep pace with inflation. Since the war has disrupted global oil markets and driven inflation higher, the COLA may also increase to reflect the higher cost of living.

Here's what to know if you or a loved one receive Social Security.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

A home warranty from Choice Home Warranty could pick up the slack where insurance falls short.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

What the war means for the 2027 COLA

The 2026 COLA came in at 2.8%, and the 2027 COLA will be 3.6%. The war's effects on energy prices may have contributed to the higher 2027 COLA.

Iran's closure of the Strait of Hormuz drove Brent crude oil prices past $120 per barrel in spring 2026. In 2022, former Federal Reserve Chair Jerome Powell explained that every $10 increase in the oil price drives up inflation by 0.2 percentage points and brings down Gross Domestic Product growth by 0.1 percentage point, meaning the war's impact on the economy may be long-lasting.

Those impacts were quickly reflected in energy prices. In April 2026, energy prices rose 17.9% year over year, and in May, energy costs increased 23.5% year over year. In May, gasoline prices were 40.5% higher than a year earlier. Energy accounted for more than 60% of the monthly increase in the overall CPI, which rose 4.2% over the preceding 12 months.

Shopping for cheaper auto insurance? Enter your zip code here to get started.

How the Social Security COLA is calculated

Higher consumer prices contributed to third-quarter inflation, which determines the 2027 COLA. The COLA is based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which the Bureau of Labor Statistics calculates.

Only third-quarter data is used, and it's compared with the third-quarter data from the last year a COLA took effect. If the CPI-W has increased, a COLA percentage is applied, and benefits increase for the next year.

The COLA calculation is based on data from July, August, and September. In October, it was announced that the 2027 COLA would be 3.6%.

What a higher COLA actually means

At first glance, a higher COLA might seem like a positive change, since it means beneficiaries may receive larger Social Security checks in 2027. But a higher COLA doesn't necessarily mean retirees will feel financially better off.

A COLA isn't designed to outpace inflation, but to ensure that benefits keep up with inflation. A 2027 COLA won't take effect until January, meaning retirees must cope with existing inflation rates until then without an extra benefits boost.

Since the cost of energy, food, health care, and housing is already climbing, retirees have many months to go before their benefits may increase. That's a long time to stretch a budget that doesn't account for inflation.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today— because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up to 25% off your AARP membership, making it just $15 the first year with auto-renewal.

Could the COLA come up short

The COLA may not accurately reflect the expenses that retirees face. Since retirees often spend a large portion of their budgets on health care, which often outpaces inflation, the COLA may not result in a benefits increase large enough to keep up with the climbing costs retirees face.

The COLA calculation also doesn't reflect any inflation that could occur during the fourth quarter. As of October 2026, the war with Iran is ongoing, and Brent crude oil prices were over $115 per barrel. Inflation could continue to climb, and the 2027 COLA wouldn't account for increases from October through December.

Bottom line

Oil markets are volatile, and there is no clear sign the war in Iran will end before the end of 2026. The 2027 COLA may not keep pace with the price increases retirees experience after the adjustment takes effect.

For now, focus on near-term strategies to help build your financial stability. Work to reduce discretionary spending, build up your savings, and explore utility assistance programs to save money in retirement, rather than counting on the 2027 COLA to close the gap.

More from FinanceBuzz: