Here’s Why Retirees Could See a Larger Social Security COLA in 2026

When the Social Security Administration (SSA) announced back in October that benefits would be rising by 2.5% in 2025, a lot of seniors were upset to hear that news.

It happens to be that 2025’s cost-of-living adjustment, or COLA, is the smallest one Social Security recipients have seen in years. And for many, that meager raise may be making it so they’re unable to pay their bills.

There’s reason, however, to believe that 2026’s Social Security COLA could be larger than 2.5%. But the reason behind it isn’t a great one.

Why your Social Security benefit could increase substantially next year

For Social Security benefits to get a large COLA, inflation needs to pick up. And if tariff policies are imposed at full force, that’s exactly what could happen.

There’s a reason tariffs have consumers so rattled. They have the potential to increase the cost of many common consumer goods.

That’s a problem, because as it is, many people are living paycheck to paycheck after years of lingering inflation. Tariffs might only make the problem worse.

But there is a big of a silver lining, at least as far as retirees are concerned. If tariffs lead to an uptick in inflation, it could result in a more generous Social Security COLA in 2026. So seniors could see their benefits rise more than 2.5%.

It’s too soon to come up with a COLA estimate

If you search the internet, you’ll probably find an estimate of next year’s Social Security COLA. But you may not want to put much stock in any projection you see today.

First of all, the impact of tariffs on the economy is yet to be determined. Only once the full impact is seen can experts try to tie that into next year’s Social Security raise.

But also, Social Security COLAs are specifically based on third quarter inflation-related changes. This means that it’s impossible to determine what a given COLA looks like until there’s a complete data set for the months of July, August, and September.

For this reason, the SSA announces COLA updates every October. At that time, it also announces related changes, such as adjustments to Social Security’s earnings-test limits and wage cap, which determines how much income is taxed to fund the program.

Of course, the bad news is that even if Social Security benefits do get a nice increase in 2026, it’s only going to be offset by higher living costs. For this reason, larger Social Security COLAs aren’t something to celebrate, even though many seniors might argue that they are.

At the end of the day, Social Security COLAs are designed to help seniors break even in the context of rising costs. A smaller COLA means inflation has cooled, while a larger COLA means it’s increased. Seniors don’t typically come out winners, financially speaking, because of a COLA, regardless of its size.

The best way seniors can get ahead financially is to have income and investments outside of Social Security. Those whose portfolios can outpace inflation are in a particularly strong position to thrive financially versus worry about money all the time.

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