The Social Security ‘Trump Bump’: Why the Tariff-Induced 2.8% Raise Falls Short for Retirees

For much of 2025, there was one big question on the minds of Social Security recipients: What would their 2026 cost-of-living adjustment (COLA) look like?

In late October, seniors finally got their answer. The Social Security Administration announced that benefits would getting a 2.8% COLA in 2026.

That 2.8% COLA, historically speaking, isn’t Social Security’s most generous. But it’s also far from the smallest COLA to ever arrive.

In fact, next year’s COLA is larger than the 2.5% COLA seniors got at the start of 2025. And it’s certainly larger than the multiple 0% COLAs seniors have gotten in the past.

Still, 2026’s COLA was initially hyped to be a meaningful one. But in reality, seniors on Social Security may find that their upcoming raise doesn’t do very much for their finances.

How Trump’s tariffs led to a 2.8% COLA

Social Security COLAs are based on inflation. When costs rise, Social Security benefits tend to follow suit.

In 2025, President Trump made good on his promise to implement strict tariff policies. And since then, consumers have been grappling with higher costs.

Higher costs are generally not a positive thing, but there can be a silver lining for retirees — a larger COLA. And lo and behold, 2026’s COLA is coming in higher than 2025’s. Tariffs were likely a big driver of that.

But while seniors on Social Security can look forward to a fairly decent COLA in 2026, it may not give them the buying power they’re hoping for.

Why a 2.8% COLA just isn’t enough

Although a 2.8% COLA, as mentioned earlier, isn’t overwhelmingly stingy in the context of Social Security raises, there are a few reasons it may fail seniors in 2026.

First, the cost of Medicare Part B is rising substantially. The standard monthly premium is going up by $17.90, which will eat into seniors’ upcoming COLA significantly.

As a reminder, seniors who are enrolled in Medicare and Social Security pay their Part B premiums out of their benefits directly. For Social Security recipients not on Medicare, the average monthly retirement benefit is likely to rise by $56 after 2026’s COLA is applied. For those on Medicare, that increase may be closer to $38, which clearly won’t go as far.

Also, if Trump’s tariffs drive costs up even further in 2026, a 2.8% raise may not cut it.

But the problem with Social Security COLAs extends far beyond 2026 circumstances. The reality is that those COLAs commonly fall short because they fail to adequately capture the costs retirees face.

Many retirees spend a lot of money on healthcare. But the formula used to calculate Social Security COLAs does not do a good job of taking healthcare costs into account, leaving seniors with a shortfall.

In fact, the nonpartisan Senior Citizens League points out that based on its data, Social Security recipients lost 20% of their buying power between the period of 2010 and 2024. That loss of buying power stems largely from COLAs that weren’t sufficient.

Advocates have been pushing to change the way COLAs are calculated so they’re based on a senior-specific index that would give healthcare costs more weight. But until a change is made, Social Security COLAs are likely to fail seniors in future years.

Don’t overlook this option for boosting your Social Security checks

While seniors may end up disappointed in their upcoming Social Security COLA, as well as future COLAs, you should know that the larger your monthly checks are to begin with, the more value the program’s COLAs should have. And if you aren’t yet on Social Security, there’s a very easy way to boost your monthly benefits.

All you have to do is delay your claim past full retirement age (FRA), which is 67 if you were born in 1960 or later. For each year you hold off, up until age 70, your benefits get an automatic 8% boost.

So let’s say you’re eligible for $2,000 a month at your FRA of 67. Filing at 70 will give you $2,480 a month instead.

Now, let’s look at what a 2.8% COLA might do in both scenarios. For a $2,000 benefit, a 2.8% raise leads to a $56 boost. For a $2,480 benefit, a 2.8% raise leads to an increase of over $69.

It’s in your best interest to try to score larger monthly Social Security checks if you expect the program to be a major source of retirement income for you. Even though there’s a big flaw in the way Social Security COLAs are calculated, starting out with larger benefits could give you that much more buying power in retirement, leading to less financial stress, even in the face of rising healthcare costs.