This Social Security Change Made by President Trump Could Negatively Impact Retirees in 2026

Key Points

• President Trump has instituted a hiring freeze across federal agencies that could lead to an inaccurate cost-of-living adjustment (COLA) for Social Security beneficiaries in 2026.

• The Bureau of Labor Statistics (BLS) has fewer workers tracking prices, so the agency has used less accurate guesswork more frequently than usual to calculate inflation this year.

• BLS officials say current procedures will remain in place until the hiring freeze ends, which means Social Security's COLA will be based on suspect inflation data.

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President Donald Trump has repeatedly promised to protect Social Security benefits, but he has also vowed to rid the retirement program of fraud, waste, and abuse. "I'm not going to touch Social Security, Medicare, Medicaid. Now, we're going to get fraud out of there," he told Fox News earlier this year.

The president has already broken one of those promises. The One Big Beautiful Bill Act signed into law in July will cut Medicaid spending 14% in the next decade and leave 10 million Americans without health insurance, per nonprofit research organization KFF. But Trump has generally stayed true to his word where Social Security is concerned.

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The Social Security Administration (SSA) has worked with the Department of Government Efficiency (DOGE) to identify over $1 billion in cost savings. The SSA has also improved customer service by reducing field office and phone wait times, upgrading its online portal, and adding new antifraud capabilities. The agency will also cut costs by switching exclusively to electronic benefit payments in September.

However, President Trump has made one change that could hurt retired workers next year. A federal hiring freeze has impaired the Labor Department's ability to collect inflation data, which means Social Security's 2026 cost-of-living adjustment (COLA) could be inaccurate.

Image source: Official White House Photo by Shealah Craighead.

President Trump imposed a hiring freeze across federal agencies

President Trump instituted a federal hiring freeze mere hours after his inauguration on Jan. 20. The directive applied to "all executive departments and agencies, regardless of their sources of operational and programmatic funding," but made exceptions for military personnel and positions related to immigration enforcement, national security, and public safety.

The hiring freeze, which has twice been extended, is scheduled to stay in place through Oct. 15. Directives on the topic state, "Nothing in this memorandum shall adversely impact the provision of Social Security." But the hiring freeze has arguably done just that by hindering the Labor Department's ability to gather inflation data, which means Social Security's 2026 cost-of-living adjustment (COLA) will be based on suspect numbers.

How the hiring freeze could hurt Social Security beneficiaries

The Bureau of Labor Statistics (BLS) is the branch of the Labor Department responsible for tracking consumer prices. Workers called enumerators check what businesses charge for specific products across different cities each month, and statisticians compile that data to compute inflation. Third-quarter inflation data (i.e., July to September) is used to determine Social Security's COLA for the subsequent year.

Some economists argue the hiring freeze has hindered the process. BLS statisticians have used less accurate guesswork to calculate inflation more frequently than usual because fewer enumerators are available to check prices, according to The Wall Street Journal. BLS officials say current procedures will remain in place until the hiring freeze is lifted, meaning data gathered in the third quarter could misrepresent true inflation.

That raises concerns regarding the accuracy of Social Security's 2026 COLA. If true inflation is higher than reported in the third quarter, benefits will lose buying power next year because the COLA will be too small. Of course, the situation could just as easily be advantageous for retired workers. If true inflation is lower than reported, benefits will gain buying power because the COLA will be too large.

Nevertheless, the current situation is less than ideal because there will be lingering doubts about whether Social Security's 2026 COLA is accurate. And the timing is particularly bad because most retired workers believe the last two COLAs were insufficient, according to research from The Motley Fool.

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