What's Happening?
Analysts have raised their forecasts for the Social Security 2026 cost-of-living adjustment (COLA) due to rising inflation, which has been influenced by President Trump's tariff policies. The Bureau of Labor Statistics has been able to compile the necessary
data to determine the COLA despite a government shutdown that began in early October. The Social Security Administration is set to announce the official COLA on October 24, 2025. The Senior Citizens League initially predicted a 2.1% COLA for 2026, but this has been revised to 2.7% due to increased inflation. Independent analyst Mary Johnson also adjusted her forecast from 2.1% to 2.8%. The tariffs have led to an average tax on U.S. imports rising to 16.7%, the highest since 1936, contributing to inflation rates increasing from 2.3% in April to 2.9% in August.
Why It's Important?
The increase in the Social Security COLA is significant as it directly affects the income of retirees, ensuring their benefits keep pace with inflation. The adjustments are crucial for maintaining the purchasing power of Social Security benefits, which are a primary source of income for many retirees. The tariffs imposed by President Trump have accelerated inflation, impacting the cost of goods and services. This situation highlights the broader economic implications of trade policies on domestic inflation and consumer prices. Retirees stand to gain from the increased COLA, with the average retired worker expected to receive an additional $54 to $56 per month in 2026.
What's Next?
The Social Security Administration will officially announce the 2026 COLA on October 24, 2025. Beneficiaries will receive notifications of their updated benefit amounts in December. The announcement will also include changes to retirement earnings test amounts, affecting those who claimed Social Security before reaching full retirement age. The ongoing government shutdown may continue to impact other federal operations, but the COLA determination process remains unaffected.