In principle, Social Security’s more than 70 million regular recipients are just days away from a major announcement. Unless a federal government shutdown causes a delay in the release of crucial data (which I’ll discuss shortly), the Social Security Administration (SSA) is slated to reveal the eagerly awaited cost-of-living adjustment (COLA) on October 15.
According to nearly 25 years of Gallup’s annual surveys, Social Security is far more than a monthly deposit. For between 80% and 90% of retirees, it’s an essential source of income that helps them meet their financial obligations. That’s why knowing the upcoming year’s payment amount is so significant for retired Americans.
However, the increase for next year is expected to be unlike any seen before. Because of President Donald Trump’s recently enacted tariff and trade policies, independent analysts are predicting a so-called “Trump bump” for Social Security’s 2026 COLA.
President Trump speaking. Image credit: Official White House Photo by Joyce N Boghosian, courtesy of the National Archives.
How is the Social Security COLA determined, and what could cause a delay in the announcement?
At its core, Social Security’s cost-of-living adjustment is intended to ensure beneficiaries’ payments keep up with inflation. If the overall price of goods and services rises by 3%, benefits should also increase by 3% to maintain purchasing power. This is the purpose of the COLA.
Since 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been the benchmark for calculating nearly annual COLAs. The CPI-W tracks over 200 spending categories, each with its own weighting, allowing the index to be reported as a single figure by the U.S. Bureau of Labor Statistics (BLS) each month. This figure shows whether prices are generally rising (inflation) or falling (deflation).
However, only the CPI-W figures from July, August, and September—the third quarter—are used to calculate the COLA. If the average CPI-W for these three months is higher than the same period the previous year, it signals inflation and triggers an increase in Social Security payments.
The year-over-year percentage change in the average third-quarter CPI-W, rounded to the nearest tenth of a percent, becomes the COLA that beneficiaries receive.
The current challenge is that the BLS’s September inflation report is the final piece needed to determine the 2026 COLA. If the federal government shutdown halts the release of most economic data, this could indefinitely postpone both the BLS report and the Social Security COLA announcement.
Since the introduction of Trump’s tariffs, inflation has seen a slight uptick. US Inflation Rate data via YCharts.
Trump’s trade policies are expected to boost Social Security’s 2026 COLA
Once the BLS releases September’s inflation numbers—whether on October 15 or later—more than 70 million Social Security recipients, including retirees, people with disabilities, and survivors, will be anticipating another above-average increase, and it appears they’ll receive one.
After the U.S. money supply expanded dramatically during the COVID-19 pandemic, Social Security COLAs surged. From 2022 to 2025, monthly benefits rose by 5.9%, 8.7%, 3.2%, and 2.5%, respectively, compared to a 2.3% average annual increase from 2010 to 2025.
Two independent forecasts suggest the 2026 adjustment will surpass this 16-year average. The Senior Citizens League (TSCL), a nonpartisan advocacy group, predicts a 2.7% COLA for next year. Meanwhile, Social Security and Medicare policy expert Mary Johnson expects a slightly higher 2.8% increase. For the average retiree, a 2.7% to 2.8% COLA translates to an extra $54 to $56 per month.
These two projections have a couple of things in common. First, if either TSCL’s or Johnson’s estimate proves correct, it would mark the first time since 1997 that five consecutive COLAs have reached or exceeded 2.5%. From 1988 to 1997, annual increases ranged from 2.6% to 5.4%.
The other shared factor is that President Trump’s tariffs and trade measures have contributed to these higher estimates.
In early April, the president rolled out a trade plan that included a 10% global tariff and increased “reciprocal tariffs” on numerous countries with significant trade imbalances with the U.S. Although subsequent deals and changes have modified the original tariff, it is still expected to put upward pressure on inflation, and therefore on the Social Security COLA.
In Do Import Tariffs Protect U.S. Firms?, four economists from the New York Federal Reserve, writing for Liberty Street Economics, analyzed the effects of Trump’s 2018–2019 China tariffs on American companies and the stock market. They highlighted that failing to distinguish between output and input tariffs posed challenges for U.S. businesses.
Output tariffs are taxes on finished goods imported into the U.S., while input tariffs are levied on materials used in domestic manufacturing. Input tariffs can make American products less competitive and drive up domestic prices. This is likely the source of the modest “Trump bump” in Social Security benefits.
Image credit: Getty Images.
The Trump bump meets a lose-lose situation
Although a fifth consecutive year of above-average COLAs, partly due to Trump’s trade policies, may sound promising, a closer look reveals some drawbacks.
One major challenge facing older beneficiaries next year is a significant increase in the Medicare Part B premium. Part B covers outpatient care, and its premium is typically deducted directly from the monthly Social Security payments of those enrolled in both programs.
In both 2024 and 2025, the Part B premium jumped by 5.9%, outpacing the 3.2% and 2.5% COLAs for those years. According to the 2025 Medicare Trustees Report released in mid-June, the monthly Part B premium is expected to climb by 11.5% to $206.20 in 2026. This would be the eighth time in 25 years that the premium has risen by double digits year over year.
If this projection holds, it will likely offset much of the benefit of the COLA for most dual enrollees next year.
Another issue for beneficiaries is that the CPI-W does not accurately reflect their spending patterns. As its name suggests, the index tracks expenses faced by “urban wage earners and clerical workers,” most of whom are not retirees or Social Security recipients.
SSA data shows that 87% of standard Social Security recipients are age 62 or older. Seniors allocate a larger share of their budgets to housing and healthcare than working-age adults, but the CPI-W does not give extra weight to these categories. This has led to a gradual erosion of Social Security’s purchasing power since the start of this century.
Even with a Trump bump, retirees are unlikely to escape this difficult situation in 2026.
