Is it too soon to be wondering how much the next Social Security "raise" will be? I don't think so.
Granted, we won't know for sure until the Social Security Administration (SSA) makes its highly anticipated announcement in mid-October. However, a little speculation a few months in advance doesn't hurt anybody. And history could provide some insight into what to expect with the 2026 Social Security cost-of-living adjustment (COLA).
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COLA historical trends
Americans have had two back-to-back years of lower Social Security COLAs after the sky-high increase of 8.7% in 2023. What has usually happened after two consecutive years of declining COLAs in the past? The historical odds point to a higher 2026 COLA.
I looked back at annual Social Security COLAs since they became automatic in 1975. The Social Security increase for 1984 was lower than the previous year after two years in a row of declines. It was a similar story in 1994. However, in the other six cases, the Social Security COLA increased after two consecutive years of decreases.
2026 will be the second year under a different presidential administration than the previous two years. Have there been any clear historical trends with the COLA related to a new occupant of the Oval Office? Not really.
There have been seven new presidential administrations since Jimmy Carter was in the White House. In the first full year of a new U.S. president, the Social Security COLA was higher than the previous year three times and lower than the previous year four times.
A wild card with limited historical precedents
Social Security COLAs are based on inflation. To be specific, they're calculated by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year with the average CPI-W for the third quarter of the previous year. Anything that drives inflation higher will, in turn, cause the Social Security COLA to be higher. (The COLA can be 0%, but it's never negative.)
That's where President Donald Trump's tariffs come into play. Many economists believe that steep tariffs could lead to a resurgence in inflation as importers pass along higher prices to consumers. The Federal Reserve agrees. The minutes from the Fed's meeting earlier this month revealed that nearly all of the 19 officials saw a risk of higher inflation due to Trump's tariffs.
What does history tell us about Social Security COLAs after steep tariffs were implemented? There aren't many precedents. The first Trump administration levied tariffs on many products imported from China, but those tariffs were much more limited than those implemented this year. Inflation and the Social Security COLA still rose, though.
Perhaps the most similar previous occurrence of high tariffs came when Richard Nixon was president. In August 1971, Nixon implemented 10% tariffs for four months. However, this was before automatic annual Social Security COLAs went into effect. Still, the next Social Security increase, which required congressional action, was a whopping 20%.
The present is more important than the past
I don't think history is all that great of a guide in helping predict what the 2026 Social Security COLA will be. The reality is that the present is more important than the past, at least where COLAs are concerned.
The Senior Citizens League (TSCL), a nonprofit organization that advocates for seniors, updates a model used to project the next Social Security COLA every month. Its latest forecast is for a 2026 COLA of 2.4%, slightly lower than the 2.5% increase this year. This would be the lowest COLA since 2021.
However, the TSCL's projection could change dramatically if tariffs cause inflation to soar. Retirees will have to keep wondering about what the 2026 COLA will be until October.
