Social Security's 2026 Cost-of-Living Adjustment (COLA) Will Get a "Trump Bump" -- Here's What to Expect and Why It Might Disappoint Millions

Social Security beneficiaries will have to wait a few extra days for this year's COLA announcement. The government shutdown delayed the final CPI report needed to determine the exact increase for next year's benefits until Oct. 24.

When we do get the official COLA, however, it's expected to be much higher than analysts anticipated at the start of the year. Retirees can thank President Donald Trump for that. But there are some important developments that could make that bigger COLA a disappointment for many households, and Trump is to thank for that as well.

Here's what to expect and why the upcoming COLA announcement could leave many retirees disappointed.

Image source: Official White House photo by Andrea Hanks.

What goes into the Social Security COLA calculation?

As the name implies, the annual cost-of-living adjustment (COLA) for Social Security is designed to help retirees keep up with the rising costs of goods and services.

Since 1975, the COLA has been tied to an official measure of inflation published by the Bureau of Labor Statistics, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration takes the average CPI-W reading from the third quarter of the year (July through September) and calculates the average year-over-year increase during the period. That number becomes the COLA for the following year.

The BLS was scheduled to release the CPI numbers on Oct. 15 this year, but it was delayed due to the government shutdown. Fortunately, the shutdown began Oct. 1, so it likely has all the data needed to accurately calculate the index for September. The BLS called workers back to the office earlier this month to ensure it can publish the September CPI report in a timely manner, as it affects multiple calculations beyond the COLA as well as the Federal Reserves interest rate decisions.

As things stand, we'll now receive the final number on Oct. 24. The SSA will likely publish its COLA calculation at the same time or shortly after the CPI release.

The "Trump Bump" set to hit Social Security's COLA

Analysts currently expect another considerable raise for Social Security benefits in 2026. The Senior Citizens League expects the Social Security Administration to announce a 2.7% COLA. Independent analyst Mary Johnson sees it coming in slightly higher at 2.8%, as does the Committee for a Responsible Federal Budget.

What's notable about those estimates is that they're all higher than what the analysts anticipated at the start of 2025. In January, The Senior Citizen's League expected just a 2.1% COLA for 2026. Johnson also expected a 2.1% COLA early in the year.

One of the biggest factors impacting the continued revision higher as we get closer to the official number has been the Trump administration's trade policies. The impact of tariffs, especially since the start of the summer, can't be ignored. While some businesses kept pricing stable to remain competitive, others fully passed on the cost of the tariffs to consumers. That's resulted in higher prices, which means higher CPI-W readings, which means a higher COLA.

But here's the disappointing reality many retirees will face. The impact of the Trump tariffs is just getting started. Many businesses strategically bought additional inventory ahead of the tariff implementation, which can be seen in the increase in the trade deficit in the first seven months of the year. As those businesses sell through that inventory and import new, more costly, inventory, it'll likely pass more of the tariff costs on to consumers.

That means inflation will likely continue to climb, as we've seen the last few months. Meanwhile, the COLA is tied to the third-quarter inflation numbers, so retirees could continue to see prices climb faster than the increase in their monthly benefits. That's exacerbated by the fact that categories where seniors spend the most, like medical care, housing, and transportation, are already climbing faster than the overall inflation rate.

While retirees might get a bigger-than-expected COLA thanks to the Trump administration's policies, they are also facing some significant downside from potential tariff-related price hikes over the next few months that could have a drastic impact on their 2026 budgets.

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