Social Security's 2026 Cost-of-Living Adjustment (COLA) May Surprise Retirees for This Reason

When the Social Security Administration announced this past October that retirees would be getting a 2.5% cost-of-living adjustment (COLA), many seniors were disappointed. And that was understandable. A 2.5% raise isn't particularly generous, especially in light of recent Social Security COLAs that have been far more robust.

Meanwhile, inflation has cooled modestly since the start of 2025. And that's a good thing in theory. The problem, though, is that it could lead to an even smaller Social Security COLA in 2026 than what seniors got at the start of 2025.

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It's too soon to predict what 2026's Social Security COLA will look like. That's because COLAs are specifically based on third-quarter inflation data.

But based on whatever data is available so far, the Senior Citizens League, a nonpartisan advocacy group, had made a prediction about next year's COLA. And as of early April, it was calling for a 2.3% boost to Social Security benefits in 2026.

Clearly, that's not great news for anyone hoping for a larger raise. But that 2.3% estimate may not be all that accurate for one big reason.

Tariffs could drive prices upward

The Trump administration is implementing tariff policies in 2025. It's still unclear as to exactly what those will look like. But many experts are certain that tariffs will drive consumer prices upward.

If that's the case, inflation could reverse course during the second half of 2025. And if there's a huge uptick during the third quarter of the year in particular, it could lead to a much larger Social Security COLA than 2.3%.

But is that a good thing? Not really.

The problem with Social Security COLAs is that generous ones come at the cost of higher price increases. So all told, beneficiaries really can't win. The best they can generally hope for is a break-even scenario, where their COLAs do the job of allowing them to maintain buying power from year to year.

Should Social Security recipients be preparing for tariffs?

A larger COLA in 2026 could help Social Security beneficiaries stretch their monthly benefits in the face of tariffs. But there's the very real risk that tariffs will strain seniors' budgets and make it harder for those who are already struggling to make ends meet.

The Senior Citizens League warns that tariffs have the potential to drive drug prices upward for seniors. As it is, many retirees have a hard time affording their medication. But import taxes could impact hundreds of drug products from trade partners.

Plus, tariffs could easily drive up the cost of food, whether by making imports more expensive or by forcing more domestic production that comes at a higher price tag. So either way, seniors on Social Security need to brace for what's to come -- and, when possible, find ways to boost their income outside of any COLA that comes down the pike. That could mean working part-time or joining the gig economy for extra cash.

Of course, it's too soon to predict exactly how tariffs will affect the economy, just as it's too soon to predict exactly what 2026's Social Security COLA will look like. But retirees should know that while next year's COLA might end up coming in higher than expected, that outcome won't necessarily be one to celebrate.

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