Will Trump’s Tariffs Lead to a Larger Social Security COLA in 2026?

When the Social Security Administration announced last October that Social Security benefits would be getting a 2.5% cost-of-living adjustment (COLA) in 2025, retirees were not very happy for two reasons.

First, that number is pretty small in its own right. Second, the Social Security COLAs that came through in recent years had been far more generous. And the fear among retirees was that a 2.5% raise wouldn’t go very far in 2025.

So far, they’ve been proven right.

The hope was that inflation would steadily decrease in 2025. Instead, it’s mostly been outpacing seniors’ most recent Social Security COLA, causing retirees (and workers, for that matter) a world of stress.

At this point, the hope is that 2026’s Social Security COLA will be larger than 2025’s. And based on recent economic events, seniors may just get their way. But that doesn’t mean they’re going to be happy with the end result.

Why next year’s Social Security COLA could be larger than expected

Social Security COLAs are tied directly to inflation. In fact, the whole reason for those COLAs is that many seniors get most or all of their income from Social Security. And without an annual boost, people in that situation would be guaranteed to lose out on buying power from one year to the next.

Years back, lawmakers voted to make Social Security COLAs automatic. This doesn’t mean benefits go up every year. Rather, changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers determine whether Social Security benefits get to go up or stay the same. However, as long as there’s an increase in that index, benefits rise to some degree.

So far this year, inflation hasn’t been so rampant. But the introduction of tariffs could change that.

Consumers are concerned about tariffs because they have the potential to drive living costs upward. That could lead to a rise in inflation, and also, a more substantial Social Security COLA in 2026.

How high could that COLA get? It’s too soon to say. But if inflation picks up, there’s a strong chance seniors could be looking at a larger COLA in 2026 than what they received at the start of 2025.

Don’t start counting that money just yet

It’s natural to get excited about a more generous Social Security COLA. But remember, we’re a long way off from being able to project what next year’s raise will look like.

In fact, you should know that Social Security COLAs are based on inflation changes during the third quarter of the year. Seeing as how we’re barely into the second quarter of 2025, we’re nowhere close to having an accurate read on inflation.

You should also know that if Social Security benefits get a larger boost in 2026, it will come at the expense of more problematic inflation in 2025. So if you’re someone who’s very reliant on Social Security, now’s a good time to assess your savings and spending, and to see if there are ways to tweak your budget to allow for the higher costs that may come down the pike.