Retirement Social Security

Rising Gas Prices May Result In A Larger Social Security Check Next Year - Here's Why

There's a less obvious benefit to seeing gas prices soar.

By Maurie Backman , Edited by Laura Hohenstein

Updated April 2, 2026

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Whether you're working or retired, your goal is probably to keep as much cash in your wallet as possible. But soaring gas prices are making that increasingly difficult.

On March 31, the average gas price hit $4.02 per gallon on a national scale. Two days before the Iran conflict erupted, the average price per gallon was only $2.98. That means gas prices have surged nearly 35% in just a matter of weeks. And they could keep climbing.

But while climbing gas prices may be burdening consumers, the silver lining is they could set the stage for larger Social Security checks for retirees in 2027.

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Why higher fuel costs could push Social Security checks higher next year

As of March 31, crude oil prices were up to over $100 a barrel. Higher energy costs are a bad thing in theory, since they can drain consumers' budgets. That said, if rising energy costs drive prices higher across the board, it could lead to a larger Social Security cost-of-living adjustment, or COLA, in 2027.

The nonpartisan Senior Citizens League's most recent COLA estimate for 2027 was 2.8%. The group made that projection on March 11.

But since then, oil prices have climbed at a rapid pace. So that 2.8% estimate may no longer be accurate. Rather, if inflation surges in the wake of higher energy prices, 2027's Social Security COLA could be a lot higher.

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How Social Security COLAs are calculated

Social Security COLAs are calculated based on third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When there's a rise in the index during that time from one year to the next, benefits go up.

Higher energy prices can push the CPI-W up, which can result in a larger COLA. However, we don't know how long the current gas/energy crisis will continue, and whether this near-term increase will result in a more generous COLA than the 2.8% estimate the Senior Citizens League put out most recently.

An official COLA announcement won't be made until October 2026 at the earliest. That's because the Social Security Administration needs to wait for CPI-W data from September to calculate that number officially.

How higher gas prices could impact Social Security recipients

Senior advocates have long pointed out the CPI-W is not a good benchmark for measuring COLAs. And the reason is that the spending patterns of Social Security recipients tend to differ quite substantially from the spending patterns of working Americans.

One major flaw in the CPI-W is that it doesn't account for the fact that healthcare costs tend to rise at a faster rate than broad inflation. Since Social Security recipients commonly spend a large portion of their income on healthcare, they tend to lose buying power even during periods when COLAs are more generous.

Ironically, in the situation above, Social Security recipients might come out ahead. If gas prices push the CPI-W up, it could result in a larger 2027 COLA. But many Social Security recipients are retired and therefore don't tend to drive as much as their working counterparts.

If gas prices lead to a larger Social Security COLA in 2027, seniors could actually gain buying power. That's because they stand to benefit from a large boost to their monthly checks without the burden of constantly having to pay more at the pump.

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It's best not to rely on early COLA estimates

If you're a retiree on Social Security, it's natural to want to get a handle on your 2027 COLA so you can plan for the upcoming year. But there are so many variables that could drive next year's COLA higher or lower than the current 2.8% projection.

That's why you're better off waiting until October to get an official number and taking other steps to improve your financial picture in the interim. That could mean working part-time to boost your income or strategically relocating to a part of the country that's less expensive.

Bottom line

COLAs are an important aspect of Social Security. Without them, recipients of those benefits would pretty much be guaranteed to lose buying power over time.

Although rising gas prices have the potential to result in a more generous COLA in 2027, that's not guaranteed, and it's not something you should bank on. You also shouldn't depend on a 2.8% raise, since that number could decrease based on how economic conditions play out.

Your best bet, really, is to try to diversify your retirement income streams so you're not as reliant on Social Security to cover your costs. And if you're not yet retired, do your best to boost your savings to ensure that your retirement plans aren't too dependent on the raises Social Security benefits are eligible for each year.

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