A "Trump Bump" Is Being Forecast Into Social Security's 2026 Cost-of-Living Adjustment (COLA) -- Here's How Much Extra You Might Get
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The latest projections suggest President Donald Trump's tariff and trade policies will alter Social Security checks in the upcoming year.
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personal finance
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July 20, 2025
03:44 AM
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The re indicates that What's particularly noteworthy is For an overwhelming number of retirees, Social Security vides more than just a monthly check
Moreover, It's nothing short of a foundational puzzle piece to their financial well-being
In each of the last 24 years, Gallup has asked retirees to gauge the importance of their monthly benefits from Social Security
Moreover, Consistently, 80% to 90% of respondents -- including 86% in April 2025 -- noted that their Social Security income was necessary, to some degree, to cover their expenses
For these individuals, nothing is more important than knowing how much they'll bring on a monthly basis from America's leading retirement gram
And no announcement bears more weight than the annual cost-of-living adjustment (COLA) reveal in October
President Donald Trump dering remarks
Furthermore, Image source: Official White House Photo by Joyce N
Boghosian, courtesy of the National s
Additionally, While Social Security's COLA announcement is typically straightforward, benefits are expected to be influenced by something of a "Trump bump" for 2026
Why is Social Security's COLA so important for beneficiaries
Before digging into the potential boost beneficiaries could receive in the upcoming year, it's important to lay the groundwork for what purpose Social Security's cost-of-living adjustment serves and how the Social Security Administration (SSA) calculates it
Conversely, Social Security's COLA is the tool the SSA uses to help beneficiaries avoid a loss of buying power due to inflation
Meanwhile, For example, if a broad basket of goods and services regularly purchased by Social Security recipients increases in cost by 3% between 2024 and 2025, benefits would need to climb by a commensurate amount; otherwise, beneficiaries would be unable to buy as much, in today's market environment
Market analysis shows cost-of-living adjustment increases benefits in an attempt to avoid a loss of buying power
Before 1975, there was no rhyme or reason as to when COLAs were passed along
Spanning 35 years (1940-1974), only 11 COLAs were implemented via special sessions of Congress
Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) became the inflationary tool used to calculate annual price changes, given current economic conditions
What the re reveals is has more than 200 separate spending with unique percentage weightings, which allow the CPI-W to be reported as a single figure each month
This makes for quick and concise year-over-year comparisons to determine whether prices are collectively rising (inflation) or falling (deflation)
Furthermore, Moreover, But the most interesting quirk of all with the COLA calculation is that only CPI-W readings from the third quarter (July through September) matter
Moreover, If the average CPI-W reading in the third quarter of 2025 is higher than in the comparable period of 2024, beneficiaries can expect a higher monthly payout come 2026
Conversely, A sizable uptick in the prevailing rate of inflation has led to more substantial COLAs in recent years, given current economic conditions
US Inflation Rate data by YCharts
Forecasts suggest a "Trump bump" will boost Social Security benefits in 2026 Social Security COLAs have been all over the map since 2010
During the 2010s, beneficiaries endured three years of deflation, during which no COLA was passed along (2010, 2011, and 2016), as well as the smallest positive COLA on record (0. 3% in 2017) (noteworthy indeed)
This analysis suggests that was ed up by a 5. 9% COLA in 2022, 8. 7% in 2023 (the largest on a percentage basis in 41 years), 3. 2% in 2024, and 2
On the other hand, This sizable uptick in benefits on a year-over-year basis is reflective of a historic increase in U, given the current landscape
On the other hand, Money supply and, subsequently, the prevailing rate of inflation ing the COVID-19 pandemic
With the average COLA over the last 16 years clocking in at roughly 2
Conversely, 3%, beneficiaries are crossing their fingers and hoping for a fifth consecutive year with an above-average payout boost in 2026 -- and they just might get it, courtesy of President Donald Trump's tariff and trade policies
Moreover, Back in mid-January, less than a week before President Trump was inaugurated for his nonconsecutive second term, nonpartisan senior advocacy group The Senior Citizens League (TSCL) was forecasting a 2. 1% cost-of-living adjustment for 2026
Meanwhile, Meanwhile, Social Security and Medicare policy analyst Mary Johnson, who retired as a policy analyst from TSCL last year, was jecting a 2. 2% COLA for 2026 as recently as mid-March (this bears monitoring), in today's financial world
However, But ing the release of the June inflation report from the U
Bureau of Labor Statistics last week, TSCL and Johnson have increased their 2026 COLA forecasts to 2. 7%, respectively
This increase is minently based on the expectation of modest inflation tied to President Trump's tariff and trade policies, in this volatile climate
For instance, Trump's tariff policy doesn't make much of a differentiation between output and input tariffs
The former are duties attached to ducts imported into the country, while input tariffs are affixed to goods used to complete the manufacture of a duct in the U, given the current landscape
Input tariffs have the potential to increase domestic prices and ignite inflation, which, in turn, can lift Social Security's 2026 COLA and vide a "Trump bump. " How much extra should beneficiaries expect
Based on the forecast from TSCL, a 2, given current economic conditions. 6% COLA would boost the average monthly benefit for retired workers, which topped $2,000 for the first time ever in May, by $52
As for workers with disabilities and survivor beneficiaries, their monthly payouts would climb by $41 next year
For the nearly 70 million beneficiaries currently receiving a payout from Social Security, Trump's impact on COLAs works out to apximately $9 extra per month in 2026, based on the difference in TSCL's COLA forecasts between mid-January (2, considering recent developments. 1%) and mid-July (2. 6%), and Johnson's COLA jections from mid-March (2, given the current landscape. 2%) to mid-July (2
Nevertheless, Image source: Getty Images
Retirees regularly get the short end of the stick with Social Security COLAs If these estimates from TSCL or Mary Johnson ve accurate, beneficiaries will enjoy their fifth straight year with an above-average cost-of-living adjustment, considering recent developments
Nevertheless, Social Security COLAs have a lengthy track record of disappointing retirees -- and the upcoming year is unly to break this trend (noteworthy indeed)
On one hand, switching to the CPI-W from a system that had no rhyme or reason for assigning COLAs prior to 1975 was an imvement
Conversely, the CPI-W has inherent flaws built in that continue to give retirees the short end of the stick, in this volatile climate
As this inflationary index's full name shows, it tracks the spending habits of "urban wage earners and clerical workers, in today's financial world. " These are traditionally working-age Americans who aren't currently collecting a Social Security benefit
More importantly, they spend their money quite differently than the 87% of Social Security beneficiaries who were 62 and older in December 2023
For instance, working-age Americans often spend more on education, apparel, and transportation than seniors (an important development)
Nevertheless, In comparison, people aged 62 and above spend a higher percentage of their monthly budget on shelter and medical care services than the typical working American
Unfortunately, the CPI-W doesn't vide added weighting to these important for retirees
The big issue is that the trailing-12-month inflation rate for shelter and medical care services has pretty consistently been higher than the annual COLA retirees have received
Conversely, The modest Trump bump expected in 2026 isn't going to make a dent in the loss of purchasing power that retirees have been contending with
According to TSCL, the buying power of a Social Security dollar dropped 20% between 2010 and July 2024
On the other hand, Until the costs that matter most to retirees garner more weight in the inflationary index responsible for calculating Social Security's COLA or the spending that matter most see a significant reduction in their respective inflation rates, the purchasing power of a Social Security dollar is ly to wither.
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