The 2026 Social Security cost-of-living adjustment (COLA) sits at a crossroads of policy and politics. Historically, patterns suggest that beneficiaries could expect a modest increase after two years of declining COLAs. But President Donald Trump’s aggressive new tariff policy adds a fresh layer of uncertainty. Meanwhile, retirees risk losing tens of thousands of dollars in lifetime benefits by overlooking optimization strategies—losses no COLA can recover.
Historical patterns point to a 2026 COLA increase
Since automatic COLAs started in 1975, the Social Security Administration has raised benefits in 85% of instances that followed two consecutive years of negative adjustments. The 2023 COLA peaked at 8.7% in the aftermath of the pandemic, and then 5.9% in 2024 and 2.5% in 2025. Similar downturns in 1981–83 and 1992–94 were followed by rebound COLAs of 3.5% and 2.8%, respectively.
The COLA calculation follows the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), comparing third-quarter year-over-year averages. With inflation in 2025 slowing to 2.4% by March, from 3.8% at the beginning of 2024, even a modest increase late in 2025 would push the 2026 adjustment above 2.5%. The Senior Citizens League estimates a 2.4% COLA based on recent trends, a bit below 2025’s 2.5% but in line with recovery patterns.
The tariff wild card: Inflation’s delayed return
President Trump’s April 2025 executive order levying retaliatory tariffs on $300 billion of imports sent ripples through the economy. Early indicators show:
- Imports dropped 20% during April 2025 as companies adapted to increased costs
- Gas prices dropped 15% because of decreased consumer purchases and international oil prices
- Core inflation dipped to 2.8% in March 2025, close to the Federal Reserve’s 2% target
These deflationary forces may keep CPI-W short-term below its recent level, cutting the 2026 COLA. Goldman Sachs is concerned that tariffs will contribute 2.25% to core inflation in later 2026 as supply chains strengthen and importers pass it through to consumers. Timing is a cliffhanger: price increases triggered by tariffs that take place after September 2025 (when COLAs are computed thereafter) won’t relent until 2027 for recipients.
“Today’s inflation figures are looking good, but the tariff spike still hasn’t arrived,” replies Oxford Economics’ Ryan Sweet. “Retirees may see a 3.8% core inflation rate by December 2026 — the highest since 2023”
Why benefit optimization matters more than the COLA
While much of the focus is on the final COLA percentage, retirees unknowingly leave money on the table by not optimizing lifetime benefits using claiming strategies:
- Delaying benefit claiming from age 62 to 70 increases monthly checks by 76% through delayed retirement credits
- Spousal coordination has the potential to receive as much as 50% of a spouse’s benefit at age 67
- Correcting earnings records provides the choice of replacing low-earning years with higher earning prior to retirement
A worker eligible for $1,500/month at age 67 may receive $2,640/month by waiting until age 70 — a $23,760 annual difference from taking it at age 62. However, only 4% of recipients wait until age 70, usually because of health issues or lack of knowledge regarding break-even points.
What retirees need to do now
As tariffs obscure the inflation horizon, retirement planners suggest:
Budgets tested for both 2.4% and 3.8% COLA scenarios
Tax-favored saving highlighted to counteract possible benefit cuts
Employing claim strategists to estimate spousal and survivor benefits opportunities
With the Social Security Trust Fund projected to deplete by 2035, the 2026 COLA becomes a symbolic reminder: annual adjustments won’t resolve deeper structural shortfalls. Retirees must look beyond yearly increases if they want to protect their financial future—because history offers clues, but not guarantees.
Read more: What’s the best way to deal with the Social Security’s new AI phone bot
