In theory, the big day for Social Security's more than 70 million traditional beneficiaries is less than a week away. Depending on whether or not the federal government shutdown delays a key data release (which I'll touch on in a moment), the Social Security Administration (SSA) is expected to announce the much-anticipated cost-of-living adjustment (COLA) on Oct. 15.
Based on nearly a quarter century of annual surveys from Gallup, Social Security income is more than just a monthly check. For 80% to 90% of retirees, it represents a necessary form of income that helps them, in some capacity, cover their expenses. Knowing how much retired workers will receive in the upcoming year is of great importance.
But next year's raise will be unlike anything we've witnessed before. Due to President Donald Trump's newly implemented tariff and trade policy, independent estimates are forecasting something of a "Trump bump" for Social Security's 2026 COLA.
President Trump delivering remarks. Image source: Official White House Photo by Joyce N Boghosian, courtesy of the National Archives.
How is Social Security's COLA calculated, and why might this announcement be delayed?
In its simplest form, Social Security's cost-of-living adjustment is designed to help beneficiaries keep pace with the inflationary pressures they're contending with. If the cost for a large basket of goods and services rises by 3%, benefits would also need to climb by the same percentage to avoid a loss of purchasing power. This is where Social Security's COLA comes into play.
Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) became the inflationary measure that allowed for near-annual COLAs to be passed along to beneficiaries. This index has more than 200 different spending categories, each of which has its own unique percentage weightings. This allows the CPI-W to be expressed as a single figure when reported monthly by the U.S. Bureau of Labor Statistics (BLS) to determine if prices are, collectively, increasing (inflation) or decreasing (deflation).
However, only CPI-W readings from the third quarter -- July, August, and September -- factor into the COLA calculation. If the average CPI-W reading from the third quarter of the current year is higher than the comparable period of the previous year, inflation has occurred and Social Security checks are set to climb.
The year-over-year percentage difference in average third-quarter CPI-W readings, rounded to the nearest tenth of a percent, equates to the cost-of-living adjustment passed along to recipients.
The potential issue right now is that the September inflation report from the BLS is the final puzzle piece needed to calculate Social Security's 2026 COLA. With most economic data not being reported during the federal government shutdown, it may lead to this BLS data release, and thus Social Security's COLA announcement, being delayed indefinitely.
The prevailing rate of inflation has modestly picked up since Trump's tariffs went into effect. US Inflation Rate data by YCharts.
Social Security's 2026 cost-of-living adjustment is set for a Trump trade policy boost
When the BLS does report September's inflation data, be it on Oct. 15 or at a later date, Social Security's more than 70 million traditional beneficiaries, encompassing retired workers, workers with disabilities, and survivor beneficiaries, will be looking for another above-average "raise" -- and they should get it.
Following a historic expansion of U.S. money supply during the COVID-19 pandemic, Social Security COLAs soared. From 2022 through 2025, beneficiaries observed their monthly payouts climb by 5.9%, 8.7%, 3.2%, and 2.5%, respectively. This compares to an average increase of 2.3% from 2010 through 2025.
Based on two independent estimates, the 2026 raise is projected to come in well above this 16-year average. Nonpartisan senior advocacy group The Senior Citizens League (TSCL) is forecasting a 2.7% COLA for the upcoming year. Meanwhile, Social Security and Medicare policy analyst Mary Johnson is calling for a slightly higher 2.8% boost to payouts in 2026. A 2.7% to 2.8% COLA works out to an extra $54 to $56 per month for the average retired worker.
Both estimates share two common elements. First, the prognostications from TSCL and Johnson imply a first-of-this-century moment. Making the leap that one of these two forecasts proves accurate, it would mark the first time since 1997 that five consecutive COLAs reached or surpassed 2.5%. From 1988 through 1997, beneficiaries saw their payouts rise by 2.6% to 5.4% each year.
The other common theme of these two independent estimates is that President Trump's tariff and trade policy has modestly lifted them.
In early April, the president introduced his trade policy, which involved a 10% global tariff as well as higher "reciprocal tariffs" on dozens of countries deemed to have adverse trade balances with America. Although Trump's initial tariff has been altered considerably by announced deals and adjustments since early April, it's nevertheless expected to have an upward lift on the prevailing rate of inflation, and thus Social Security's cost-of-living adjustment.
In Do Import Tariffs Protect U.S. Firms?, four New York Federal Reserve economists, writing for Liberty Street Economics, examined Donald Trump's China tariff policy from 2018-2019 to determine its impact on American businesses and U.S. stocks. These economists specifically homed in on the lack of differentiation paid to output and input tariffs as an issue for U.S. businesses.
An output tariff is a duty applied to a finished product imported into the country. Meanwhile, an input tariff is an added tax placed on a good used to complete the manufacture of a product domestically. Input tariffs run the risk of making U.S. products less price-competitive and can increase domestic prices. This is likely where the modest "Trump bump" in Social Security benefits is coming from.
Image source: Getty Images.
Trump bump, meet no-win scenario
While a fifth-straight year with an above-average COLA, thanks in some part to President Trump's trade policy, might sound great on paper, it fails the sniff test once you dig beneath the surface.
One of the biggest headwinds aged recipients are expected to contend with next year is a notable uptick in the Medicare Part B premium. Part B is the segment of Medicare that handles outpatient services, and its premium is often automatically deducted from the monthly payout of dual enrollees (retired workers receiving a Social Security benefit who are enrolled in traditional Medicare).
In both 2024 and 2025, the Part B premium rose by 5.9%, which is already considerably higher than the 3.2% and 2.5% COLAs that were doled out in those years. Based on the 2025 Medicare Trustees Report filed in mid-June, the monthly premium for Part B is projected to rise by 11.5% to $206.20 in 2026. It would be the eighth time in the last quarter century that the Part B premium has risen by a double-digit percentage on a year-over-year basis.
Should this estimate prove accurate, it would almost certainly lessen the impact of Social Security's COLA for most dual enrollees next year.
Another problem for recipients is that the CPI-W isn't doing them any favors. As its full name shows, it's an index that tracks the costs "urban wage earners and clerical workers" face. Most urban wage earners and clerical workers aren't retirees or currently receiving a Social Security benefit.
Based on data from the SSA, 87% of traditional Social Security recipients are 62 and above. Seniors spend a higher percentage of their budget on shelter and medical care services than working-age Americans. However, the CPI-W doesn't provide added weighting to these categories, which has led to a steady loss of purchasing power for Social Security income since this century began.
Not even a Trump bump is going to help retirees overcome this seemingly no-win scenario in 2026.
