Retirees now know how much their Social Security benefits will increase next year. The Social Security Administration (SSA) recently announced an annual cost-of-living adjustment (COLA) of 2.8% for 2026. This adjustment will be slightly higher than the 2.5% increase received in 2025.
Some are referring to this higher COLA as a "Trump bump." The president's tariffs have caused inflation to rise, according to Federal Reserve Chair Jerome Powell. This higher inflation resulted in next year's Social Security COLA being higher than it would have otherwise been.
But will the 2026 Social Security COLA "Trump bump" be enough for retirees? Here's what history says.
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Recent history
We only have to turn to recent history to get an idea about whether or not past Social Security COLAs were enough for retirees. And the answer probably won't be surprising.
The Senior Citizens League (TSCL), a nonprofit organization that advocates for seniors, released its 2025 Senior Survey in June. This survey found that a whopping 94% of respondents felt that the 2.5% COLA received in 2025 was too low.
They were demonstrably right. Inflation for all of 2024, as measured by the Consumer Price Index (CPI), rose by 2.9%. The inflation metric used to calculate the Social Security COLA, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), increased by 2.8% last year. The 2.5% COLA was less than both of these inflation numbers.
As it's turning out, the 2.5% COLA wasn't enough for retirees to keep pace with this year's inflation, either. So far in 2025, the CPI has increased by 3% while the CPI-W has risen by 2.9%.
Looking deeper
This last point is important. Social Security COLAs always come too late to cover the higher costs of goods and services that retirees have already incurred. Retirees can only hope that the adjustment offsets the higher prices they must pay after the COLA takes effect. How often is this the case?
Looking back further in the past at Social Security COLA history provides an interesting answer. Automatic annual COLAs began in 1975. During the past five decades, the COLA was higher than inflation in the year the adjustment took effect only a little over half the time. This means, of course, that nearly half the time the COLA wasn't enough to offset inflation.
Assuming that the inflation numbers accurately reflect the higher prices paid by seniors is another major issue. Many experts don't believe that the CPI-W metric used to calculate Social Security COLAs assigns the proper weights to categories of expenses that are heavier burdens to seniors, such as healthcare and housing. This concern appears to have special relevance right now. The Medicare Trustees project that Medicare Part B premiums will jump by 11.6%.
Another inflation metric, the Consumer Price Index for the Elderly (CPI-E), could go a long way toward addressing those issues. TSCL performed an analysis that found the Social Security COLA would have been higher in seven of the last 10 years if the CPI-E had been used instead of the CPI-W.
What can retirees do?
The odds appear to be significant that the COLA for 2026 won't be enough. What can retirees do?
One option is to maximize non-Social Security income. Consider working part-time if that's a viable alternative. Talk with a reputable financial consultant about potential ways to increase income from retirement accounts.
Another smart strategy is to reduce expenses. For example, take full advantage of any programs for which you're eligible that could help lower costs, such as Medicare Savings Programs and the Low Income Home Energy Assistance Program (LIHEAP). If your income level is too high for these programs, you can still shop around for the most cost-effective healthcare plans, as well as potentially lower your tax burden with the help of your financial planner.
Finally, retirees can make their voices heard in Washington about the need to address the problems with how Social Security COLAs are calculated. Although this won't help make ends meet over the short term, it could have an impact over the long term.
