There is an expected increase in the projections of the New COLA (Cost-of-living Adjustment), and this is good news for retirees. According to data released by The Senior Citizens League (TSCL), the projected COLA for 2026 is now 2.3% up from the previous estimate of 2.2%.
Although it’s a small increase, it still boosts the monthly payments of over 70 million Americans who rely on Social Security and Supplemental Security Income to pay for their livelihood.
Why Did the COLA Estimate Increase?
The TSCL updates monthly COLA projection using a model based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the National Unemployment rate, and the Federal Reserve Interest rates.
The increase in Social Security COLA is partly associated with growing inflation concerns after Trump’s administration announced new tariffs on imports. Although most tariffs have been paused temporarily, they have a long-term effect that could prices of essential goods such as food, drugs, and medical equipment to increase. It’s expected that the price hikes will show up in CPI-W data soon and influence the final COLA calculation for 2026 even further.
Shannon Benton, the Executive Director of TSCL, has warned that the tariffs could have a profoundly negative impact on the daily lives of retirees. He said, “Placing broad-based tariffs on goods from numerous countries could have a profoundly negative impact on the daily lives of seniors, including the costs of drugs and medical equipment that many seniors rely on. It is also highly likely that import taxes will keep food prices high, increase auto insurance costs, and contribute to higher inflation, among other effects.”
The Effect of the COLA Increase.
If COLA holds the 2.3% level, retirees receiving $1,800 per month could get about $41 more per month or close to $492 more per year. Couples who receive $3,000 per month receive around $69 more, which is $828 annually.
Although the 2026 COLA projection is slightly lower than the 2.5% COLA in 2025, it is still good news for retirees, considering that earlier projections were lower and that inflation was expected to drop more.
Retirees Should Expect Rising Costs Too.
Although the projections of the new COLA help offset inflation, experts have warned that new tariffs could cause prices of commodities to rise faster than the rate of Social Security COLA. Retirees should expect medical costs, insurance premiums, and groceries to cost more.
According to the Journal of the American Medical Associates, up to 400 drug products imported from Canada, India, Mexico, and China could be affected. This comes after President Trump proposed a blanket 10% tariff on all imports. This has, however, been paused for 90 days after backlash from economic advisors and politicians.
What the Experts Are Saying
According to Alex Beene a financial literacy educator at the University of Tennessee at Martin, said that seniors rely heavily on imported health and wellbeing goods.
“Seniors may not be buying the latest iPhone, but they often need additional technology for healthcare that’s imported,” he said in an interview with Newsweek. “Combine that with talk of tariffs on pharmaceuticals, and you can see why cost-of-living adjustments could soar higher.”
The CEO of 9i Capital Group, Kevin Thompson, noted that COLA projection is directly linked to inflation concerns fueled by tariffs.
What’s Next for Retirees?
TSCL will continue to update its projection, and April 2025’s CPI-W data will likely take into consideration the impact of tariffs. While the 2.3% projection for COLA 2026 is just preliminary, it sets expectations of what is ahead.
For now, retirees should continue to follow updates from the SSA and hope that projections increase, even though the costs of commodities will also rise.