It's Official! Your 2026 Social Security Cost-of-Living Adjustment (COLA) Includes a "Trump Bump" -- Here's How Much Extra You'll Receive

Under normal circumstances, Social Security's more than 70 million traditional beneficiaries, which consist of retired workers, workers with disabilities, and survivor beneficiaries, would have known if their monthly payouts were climbing in the upcoming year more than a week ago. But this has been anything but a normal year.

Due to the federal government shutdown, the reporting of most economic data, including the monthly inflation report, has been delayed. What was expected to be an Oct. 15 reveal of Social Security's most important announcement of the year, the 2026 cost-of-living adjustment (COLA), was pushed back to Oct. 24.

However, this wasn't the only surprise for beneficiaries.

When the 2026 COLA was finally revealed, it was readily apparent that it included a "Trump bump" -- a modest boost associated with President Donald Trump's tariff and trade policy. With the biggest question for retirees now answered, let's take a closer look at how much extra Social Security recipients can expect to receive each month in 2026.

President Trump signing a bill. Image source: Official White House Photo by Shealah Craighead, courtesy of the National Archives.

Social Security's COLA plays a critical role for program recipients

The "COLA" you've been hearing and reading about for weeks is the Social Security Administration's (SSA's) way of helping beneficiaries keep pace with the prevailing rate of inflation.

During the 1940s, retired-worker beneficiaries didn't receive a single adjustment to their benefits. As prices rose for the goods and services they purchased, the buying power of their Social Security income steadily declined. In 1950, Congress passed the largest-ever increase to Social Security payouts of 77%!

From the first mailed retired-worker check in January 1940 through 1974, there wasn't a defined way of ensuring that benefits kept pace with rising prices, other than to have Congress pass special adjustments from time to time. This changed in 1975, which is when the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was adopted as the program's inflation-measuring stick. The CPI-W is reported monthly by the U.S. Bureau of Labor Statistics, which allows for simple year-to-year comparisons to determine is prices are, in aggregate, rising (inflation) or declining (deflation).

Though CPI-W data is based on the trailing-12-month period, only ending figures from the third quarter (July, August, and September) are used in the COLA calculation. If the average third-quarter CPI-W reading in the current year is higher than the comparable period of the previous year, the collective price for a broad basket of goods and services has increased. In other words, inflation has occurred, and Social Security recipients are due a raise.

Next year's increase is going to be historic for two unique reasons.

A higher prevailing rate of inflation has corresponded with beefier Social Security COLAs in recent years. US Inflation Rate data by YCharts.

Social Security raises in 2026 will be aided by President Trump's tariff and trade policy

The price of goods and services climbing over time is nothing new or surprising. A cost-of-living adjustment has been passed along to beneficiaries in 48 out of 51 years since the CPI-W became the program's inflationary measure. No COLA was passed along in 2010, 2011, and 2016 due to deflation.

Over the previous four years, these monthly payout adjustments picked up in a meaningful way. Following a sizable increase in U.S. money supply tied to fiscal stimulus during the COVID-19 pandemic, the prevailing rate of inflation soared -- and so did Social Security COLAs.

From 2022 through 2025, Social Security checks rose by 5.9%, 8.7%, 3.2%, and 2.5%, respectively. The 8.7% increase in 2023 marked the largest on a percentage basis since 1982, and the biggest on a nominal-dollar basis in the program's history.

The first bit of history for 2026 comes in the form of a fifth consecutive year with a COLA at or above 2.5%. The last time Social Security benefits rose by at least 2.5% for five straight years was 1988 through 1997. The announced COLA for 2026 by the SSA is 2.8%.

But the more profound history-making moment is that part of this payout boost comes from President Trump's tariff and trade policy.

In early April, Donald Trump unveiled a sweeping 10% global tariff, as well as introduced a host of "reciprocal tariff rates" on countries deemed to have adverse trade balances with America. Though some of these reciprocal tariffs were postponed and multiple trade deals have been announced since this initial unveiling, the upward lift on the U.S. inflation rate from the president's policies has been noticeable in recent months.

The issue is that Trump's tariff policy fails to differentiate between output and input tariffs. Output tariffs are duties applied to finished products imported into the country, while input tariffs are placed on goods used to complete the manufacture of a product domestically.

A December 2024 analysis by four New York Federal Reserve economists (Do Import Tariffs Protect U.S. Firms?), publishing for Liberty Street Economics, found that Trump's China tariffs in 2018-2019 (specifically input tariffs) led to inflationary pressures on businesses and U.S. consumers. It's the current input tariffs that are providing a lift to the prevailing rate of inflation, and ultimately a Trump bump to Social Security's 2026 COLA.

Image source: Getty Images.

Social Security's 2026 COLA isn't all it's cracked up to be

On a nominal-dollar basis, a 2.8% cost-of-living adjustment for the upcoming year probably sounds great. The average retired worker will see their monthly payout climb by $56, while the typical worker with disabilities and survivor beneficiary will see their monthly income respectively jump by $44 each in the new year.

But it'd be a mistake to assume you're going to see most or all of this cost-of-living adjustment. Though this represents the fifth straight year of an above-average COLA (when compared to an average increase of 2.3% since 2010), retirees can expect their increase to be offset by a couple of rapidly rising expenses.

For example, dual enrollees -- retired workers receiving a Social Security benefit who are currently enrolled in traditional Medicare -- can expect some or all of their increase next year to be offset by the projected premium hike for Part B.

Part B is the segment of Medicare responsible for outpatient services, and its premium is almost always deducted from the monthly Social Security payout of retired workers. The Medicare Trustees report published in mid-June forecast an 11.5% increase in Part B to $206.20 for 2026. If accurate, the baseline Part B premium is slated to rise by $21.20/month. For lifetime low earners receiving Social Security income, a double-digit percentage increase in Medicare Part B can offset their entire COLA.

Additionally, some of the expenses that matter most to retirees have been climbing at a stubbornly higher rate than the COLAs beneficiaries have been receiving. More specifically, the trailing-12-month rate of inflation for shelter and medical care services -- two expenses that account for a higher percentage of seniors' budgets, when compared to working-age Americans -- are both well above the 2.8% raise being passed along to beneficiaries in 2026.

Not only are aged beneficiaries likely to see some or all of their payout offset by these rising expenses, but there's the real risk of a loss of buying power in the new year.

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