A new government policy is set to bring very good news for retirees. The new policy, which is part of President Trump’s global tariff policy, could lead to a bigger cost-of-living adjustment (COLA) in 2026. This could boost how much retirees receive as benefits from January 2026.
How Trump’s Tariffs Could Boost Benefits
Due to President Trump’s 10% global tariff and other higher “reciprocal” tariffs on several trading partners, the cost of many goods could rise significantly. While this adds pressure to budgeting of incomes, it also affects how Social Security benefits are calculated.
Each year, the Social Security Administration adjusts COLA based on inflation using the Consumer Index for Urban Wage Earners and Clerical Workers (CPI-W) from July, August, and September. When inflation rises, the COLA also rises, and that’s likely to happen soon.
Trump’s tariffs have pushed inflation by approximately 2.3%, which could lead to a higher COLA.
“Tariffs are pushing prices up roughly 2.3 percent in the short run, which inflates the COLA seniors get. So yes, checks go up a bit more than they would have. But the same inflation driving that bump is eating the buying power before the check even clears,” said Michael Ryan a finance expert and the founder of MichaelRyanMoney.com, in an interview with Newsweek.
What Experts Predict for 2026
While retirees wait for the official announcement on October 15, the standstill between Republicans and Democrats could delay the announcement. However, economists and senior advocates have projected the COLA for 2026. The Senior Citizens League (TSCL) predicts a 2.7% COLA for 2026. Other analysts project that it could be slightly higher, up to 2.9%.
This could mean that the average retired worker would receive a raise of approximately $54 to $59 per month from January 2026. If those estimates prove accurate, it would mark the fifth straight year of above-average Social Security increase. This last occurred in 1997.
A Raise That Might Not Feel Like One
While retirees might feel excited by the possibility of a higher COLA, experts warn that the rising expenses could cancel out much of the increase. This is because, the prices for everyday goods and Medicare Part B premiums are also expected to rise sharply.
According to the Medicare Trustees, standard Part B premiums could rise by 11.5% in 2026 from $185 to approximately $206.50 per month. Since Medicare premiums are deducted directly from Social Security checks, a big chunk of the COLA increase could be cancelled out.
As Michael Ryan put it: “You’re basically watching your left pocket give money to your right pocket while inflation picks both.”
How Rising Prices Give and Take Away Retirees’ Gains
While Trump’s tariff policy is designed to make trade more reciprocal, it raises import prices. Economists at the New York Federal Reserve previously found that similar tariffs from earlier years led to increased domestic prices. That same pattern is likely to repeat itself and now influence the 2026 COLA.
Although higher inflation will lead to increases on monthly benefits, retirees will feel the squeeze at gas pumps, pharmacies, and grocery stores even before they receive their increased benefits.
The Outlook for 2026 and Beyond
Over 70 million Americans rely on Social Security. Surveys show that up to 90% of retirees depend on monthly benefits to cover essential expenses. Therefore, the 2026 COLA is good news for them and will improve their purchasing power despite the challenges.
Financial experts are advising retirees to see the increase as a helpful adjustment rather than a true rise.
“The ‘bump’ isn’t really a good thing. While beneficiaries are getting more in their checks, that extra amount is meant to offset the increase in prices across the board,” Alex Beene told Newsweek.
In summary, although retirees will receive larger Social Security monthly benefits in 2026, much of that rise may be absorbed by the rising costs. The 2026 COLA will therefore be a raise that helps retirees to keep up even though it doesn’t push them ahead.