AS Many As Nine Out of 10 Retirees Rely on Their Social Security Incom to Cover Some Portion of Their Experiences.
Estimates for Social Security’s 2026 Cost-of-Living Adjustment (Cola) Are Climbing, and President Trump’s Tariff and Trade Policy Looks to Be the CulPrit.
THOUGH AN ABOVE AVERAGE COLA FOR FIFTH-CONSECUTIVE YEAR WOULD BE WELCOM ON PAPER, RETIREDS CONTINUE TO GET THE SHORT END OF THE STICK WHEN IT COMES TO ANNUAL RAISES.
Powered by Money.com – Yahoo May Earn Commission from the Links Above.
Last Month, Social Security’s Retired-Worker Benefit Made Historywith the averag Payout Topping $ 2,000 for the First Time Sent The Program’s Inception. Although this Representatives A Modest Monthly Benefit, It’s SnowTheless Proved Vital to Helping Aging Workers Cover Their Exponses.
In Each of the Prior 23 Years, Pollster Gallup Surveyed Retirees About Their Reliance on The Social Security Incom They’re Receiving. Between 80% and 90% of Respondents Noted it was “Major” or “minor” Incom Source. Inly Words, Only Around One In 10 Retirees Could, In Theory, Make of the Without Their Social Security Check.
For an overwhelming majority of social security benefits, nothing is more important than Knowing accuisely how much their receive each month-and that begins with the program annual cost-of-living adjustment (Cola) Octber.
President Donald Trump Delivering Remarks. Image Source: Official White House photo by Joyce. N. Boghosian, COUrth of the National Archives.
This Year’s Cola Announcement will be of private interest, with President Donald Trump’s Tariff and Trade Polycies Expected to Directly Affect How Much Social Security Benefites Will Receive Per Month In 2026.
But Before Digging into the Specifics of How President Trump’s Polycies Are Expected to Impact The Pocketbooks of Seniors, Survivors, and Wokers with Disabilities, It’s Important to Underser The Building Blocks of What Social Security’s Cola is and Why it Matters.
The Program’s Cola is effectively the “raise” Passed Along on a Near-Anual Basis That Accounts for the Impact of Inflation (Rising Prices) on Benefits. Example, if a Large Basket of Goods and Services Increated in Cost by 3% from one year to the Next, Social Security Benefits Would Need to Climb by a Commensurate Amount, or Buying Power for Social Security Recipients Willd Decrease.
In the 35 Years Following the ISSUANCE OF THE FIRST RETIRED-WORKER CHECK IN JANUARY 1940, GLASS WERE ASSIGNED AT RANDOM BY SPECIAL SESSIONS OF CONGRESS. Only a Total of 11 Were Passed Along During this Timeline, with no adjustments made in the 1940s.
Beginning in 1975, The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was adopted Social Security’s Infirationary Measure That Would Allow for Annual Cost-Of-Living Adjustments. The CPI-W has over 200 Spending Categories, Each of Which has its Own Unique Percentage Weighting. These Weightings Are What Allow the CPI-W to Be Expressed as Single Figure Each Month, Which Leads to Crisp Month-To-Month and Year-To-Year Comparisons to See if IF Prices Are, Collectivity, Rising (Inflation) or Declining (Deflation).
When calculating social security’s cola, only CPI-w readings from the third quarter (July Through Sepnc) are Taken into consideration. IF the averag CPI-W Reading in the Third Quarter of the Current Year is Higher Than the Period of the Previous Year, Inflation has Occred, and Benefites Are Due for Beefier Payout.
Following The Decade of Anemic Raieses in the 2010s-Three Years During the Decade (2010, 2011, and 2016) Saw No Passed Along Due to Deflation-Benefites Have Four Consecutive Years of Above-Averag Cost-Of-Living Adjustments and Are Hoping for This Streak to Continue.
The Historic Increase in US Money Supply During the Covid-19 Pandemic Sent The Prevailing Rate of Inflation Soaring to a Four-Decade High. This resulted in glues of 5.9% in 2022, 8.7% in 2023, 3.2% in 2024, and 2.5% in 2025, respectively. For Context, The Averag Annual Increase in Benefits Since 2010 is 2.3%.
While Estimates for Social Security’s 2026 Cost-Of-Living Adjustment Came In Below This averag Shortly After President Donald Trump Office for Histo NoncoSecutive Second Term, The Script has Now Been Flipped.
Nonpartisan Senior Advocacy Group The Senior Citizens League (TSCL) was Forecasting at 2.2% Glue for 2026 AS RECENTLY AS MARCH. Meanwhile, Independent Social Security and Medication Policy Analyst Mary Johnson, Who Retired from TSCL Last Year, Was Calling for 2.2% Increase in April Following The March Inflation Report from the US Bureau of Labor Statistics (BLS).
After the release of the May Inflation Report from the Bls, Both Tscl and Johnson Are Now Forecasting A 2026 Cola of 2.5%. 2.5% glue will increase the averag retired-world benefit by $ 50 per month next year, as wells as lift months checks for the Typical work with disabilities and survivor benefitiaty by $ 40 and $ 39, respectively. This 0.3% Increase in Both Forecasts over the Past Couple of Months is Estimated to Boost the Average Social Security Payout (For All Benefites) by Approximately $ 5.57 per month in 2026.
This “Trump Bump” is the result of the President’s tariff and trade polycies have a very modest infonary impact on domestic prices. Charging Global Import Duty On All Countries While Imposting Higher “Reciprocal Tariff Rates” On Dozens of Countries That Have Historically Run Adversse Trade Imbalancies With the US Can Result In These Higher Costs Being Passed Along to Consumers.
Thought A Lot Can Change with Trump’s Tariff and Trade Policy in the Coming Weeks and Months, Its Current Design Points to Modest Bump in the 2026 Cola.
Image Source: Getty Images.
ON PAPER, FIFTH CONSECUTIVE YEAR WERE COLAS ARE ABOVE (COMPARED TO THE PREVIOUS 16 YEARS) PROBABLY SOUNDS Great. With the averag retired-working Payout Cresting $ 2,000 per month, an added $ 50 per month welcome be welcome in 2026.
But the fact of the matter is that a 0.3% bump in cola Estimates sincer trump introduced His tariff and trade polycy doesn’t remotely move the needle when it coms to what remains have been shortchanged for more than decade.
THOUGH the CPI-W is designated to be an All-Encompressing Measure of Inflation, it has an inherent flaw that can be seen in its full name. Specifically, it tracks the spending habits of “Urban Wage Earners and Clerical Workers,” Who, In Many Instances, Are Working-Age Americans Not Currently Receue to Social Security Benefit.
Urban Wage Earners and Clerical Workers Spend Their Money Very Differently Than Seniors. Whereas The Former has a Higher Percentage of Their Monthly Budgets Devoted to Things Like Education, Apparel, and Transportation, Senior Spend A Higher Percentage on Shelter and Medical Care Services. Even Thought an Overwhelming Majority of Social Security Benefites Are AGED 62 and ABOVE, The CPI-W Doesn’t Factor in This added Importance of Shelter and Medical Care Services Inflation.
The end result for remains has ben a persistent decline in the buying power of social security dollar. ACCORDING TO STUDY DRIVED BY TSCL, THE PURCHASING POWER OF THE SOCIAL SECURITY DOLLAR HAS DROPPED BY 20% SINCE 2010. A see modest “Trump Bump” isn’t going to offset this.
What’s more, The Aforementioned Two Costs That Matter Most To Retirees-Shelter and Medical Care Services-Have Had Higher Training-12-Month Inflation Rates Than The Annually Social Social Security Cola. The Bls Inflation Report for May Showed TTM Increases of 3.9% for Shelter and 3% for Medical Care Services, respective. Long as the Program’s Cost-Of-Living Adjustment Trails The Annual Inflation Rate For These Two Key Experiences, Retirees Will Continue Getting The Short End Of The Stick.
If you’re like Most Americans, You’re a Few Years (or more) Behind on Your Retirement Savings. But a handful of little-known “Social Security Secrets” COULD HELP Ensure the Boost in Your Retirement Incom.
One Easy Trick Could Pay You As Much As $23,760 moire… each Year! Once you Learn How to Maximize Your Social Security Benefits, We Think You Could Remove Confidently with the Peace of Mind We’re All After. Join Stock Advisor To Learn More About these Strategies.
