The Social Security Board of Trustees Just Updated Its 2026 Cost-of-Living Adjustment (COLA) Forecast. Here's How Much Your Benefits Could Increase.
The Board of Trustees files a report with Congress every year, including a forecast for the COLA.
Expectations for the annual cost of living adjustment have climbed since last year's report.
The $23,760 Social Security bonus most retirees completely overlook ›
One of the most important pieces of Social Security retirement benefits is the annual cost-of-living adjustment, or COLA. Without the COLA, many seniors would face significant shortfalls in their retirement budgets as prices for housing, healthcare, and groceries increase over time. Over the last few years, as inflation has reared its ugly head, many retirees have come to rely more and more on the annual COLA.
While we're still months away from the official announcement for next year's COLA, multiple analysts have published their best estimate for what kind of pay bump retirees could receive next year. Estimates from The Senior Citizen's League and independent analyst Mary Johnson both put the number at 2.5% in their most recent reports.
The Social Security Board of Trustees, the people in charge of the trust fund and who report on the financial status of the program to Congress, have their own estimate they publish once per year. They just published their 2025 annual report, and they have a new COLA estimate for 2026 that differs from the third-party estimates.
The annual COLA figure is released around the same time every year in the second week of October. That's because the COLA is based on data collected over the summer between July and September. Specifically, it's based on the year-over-year increase in a measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.
Every month, the Bureau of Labor Statistics surveys thousands of prices around the country for everything from apples to water bills. To calculate the CPI-W, each price is weighted by its relative portion of a standard budget for a working-age city dweller. The results are usually compiled and published by the second week of the following month.
The Social Security COLA is based on the average year-over-year increase in the CPI-W during the third quarter of the year, which ends in September. When the September CPI-W number gets published in October, the Social Security Administration is able to announce the COLA that will go into effect for benefits payments that begin the following January.
When the Social Security Board of Trustees publishes its annual report, it includes multiple estimates for the COLA. There's a high-cost, low-cost, and intermediate estimate. These are based on the net cost of each scenario to Social Security based on both outflows (benefits payments) and inflows (tax revenue).
The high-cost estimate is actually the case where the COLA is lowest. While Social Security will pay out less in benefits in that case, low inflation will also curb how much wages rise and in turn how much Social Security will collect in revenue. And since there are more workers paying into Social Security than retirees collecting benefits, a super low inflation environment can be bad for the overall health of Social Security.
The board updates its COLA estimates each year along with its full outlook for Social Security and if and when the program will deplete its trust fund. Here are its 2026 COLA estimates from May 2024 and its most recent update from June 2025.
Case
May 2024
June 2025
High-cost
1.8%
2.4%
Intermediate
2.2%
2.7%
Low-cost
3%
3%
Source: Social Security Administration.
As you can see, the board has raised its estimate for the 2026 COLA significantly since last year. It's worth pointing out that many analysts, not just the trustees, expected inflation to fall faster than it has since last year.
The Federal Reserve has tried to tame inflation by keeping rates higher for longer. At the start of last year, investors were thinking the Fed would cut rates by 150 basis points by the end of 2024. It only cut 100 basis points, and it signaled fewer-than-expected rate cuts this year, too. On top of that, there's a growing amount of uncertainty driven by the Trump administration's constantly changing trade policies and ongoing conflicts in Europe and the Middle East.
As such, there's a good chance we see a pickup in inflation this summer, pushing the COLA higher. That said, the trustees' intermediate estimate for the 2025 COLA was 2.6%, but retirees only ended up with a 2.5% bump. So, it's possible the trustees are overestimating how much prices will increase this summer.
As things stand, though, Social Security beneficiaries should expect to see a bump somewhere between 2.4% and 3% based on all the data available.
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The Social Security Board of Trustees Just Updated Its 2026 Cost-of-Living Adjustment (COLA) Forecast. Here's How Much Your Benefits Could Increase. was originally published by The Motley Fool
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Los Angeles Times
11 minutes ago
- Los Angeles Times
Social Security turns 90 this week. Republicans are trying to keep it from reaching 100
Franklin Delano Roosevelt had a clear mind about the value of Social Security on Aug. 14, 1935, the day he signed it into law. 'The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure,' he said in the Oval Office. 'We can never insure 100 per cent of the population against 100 per cent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against ... poverty-ridden old age.' He called it a 'cornerstone in a structure which is being built but is by no means complete.' FDR envisioned further programs to bring relief to the needy and healthcare for all Americans. Some of that happened during the following nine decades, but the structure is still incomplete. And now, as Social Security observes the 90th anniversary of that day, the program faces a crisis. If there are doubts about whether Social Security will survive long enough to observe its centennial, those have less to do with its fiscal challenges, the solutions of which are certainly within the economic reach of the richest nation on Earth. They have more to do with partisan politics, specifically the culmination of a decades-long GOP project to dismantle the most successful, and the most popular, government assistance program in American history. From a distance, the raids on the program's customer service infrastructure and the security of its data mounted by Elon Musk's DOGE earlier this year looked somewhat random. Fueled by abject ignorance about how the program worked and what its data meant, DOGE set in place plans to cut the program's staff by 7,000, or 12 percent, and to close dozens of field offices serving Social Security applicants and beneficiaries. This at a time when the Social Security case load is higher than ever and staffing had already approached a 50-year low. This might have been billed as an effort to impose 'efficiency' on the system. But 'a more accurate description,' writes Monique Morrissey of the labor-oriented Economic Policy Institute, 'is sabotage.' That has been conservatives' long-term plan — make interactions with Social Security more involved, more difficult and more time-consuming in order to make it seem ever less relevant to average Americans' lives. Once that happened, the public would be softened up to accept a privatized retirement system. Get the inefficient government off the backs of the people, the idea goes, so Wall Street can saddle up. George W. Bush's privatization plan, indeed, was conceived and promoted by Wall Street bankers, who thirsted for access to the trillions of dollars passing through the system's hands. This was never much of a secret, but it simmered beneath the surface. But Treasury Secretary Scott Bessent, speaking at a July 30 event sponsored by Breitbart News, said the quiet part out loud. Referring to a private savings account program enacted as part of the GOP budget reconciliation bill Trump signed July 4, Bessent said, 'In a way, it is a back door for privatizing Social Security.' The private accounts are to be jump-started with $1,000 deposits for children born this year through 2028, to be invested in stock index mutual funds; families can add up to $5,000 annually in after-tax income, with withdrawals beginning when the child reaches 18, though in some cases incurring a stiff penalty. I asked the Treasury Department for a clarification of Bessent's remark, but didn't receive a reply. Bessent, however, did try to walk the statement back via a post on X in which he stated that the Trump accounts are 'an additive benefit for future generations, which will supplement the sanctity of Social Security's guaranteed payments.' Sorry, Mr. Secretary, no sale. You're the one who talked about 'privatizing Social Security' at the Breitbart event. You're stuck with it. Plainly, an 'additive' benefit would have nothing to do with Social Security. How it would 'supplement the sanctity' of Social Security benefits isn't apparent from Bessent's statement, or the law. Still, we can parse out the implications based on the long history of conservative attacks on the program. In 1983, the libertarian Cato Journal published a paper by Stuart Butler and Peter Germanis, two policy analysts at the right-wing Heritage Foundation, titled 'Achieving a 'Leninist' Strategy—i.e., for privatizing Social Security. From Lenin they drew the idea of mobilizing the working class to undermine existing capitalist structures. Cato's 'Leninist' strategy paper explicitly advocated encouraging workers to opt out of Social Security by promising them a payroll tax reduction if they put the money in a private account. IRAs, the authors asserted, would acclimate Americans to entrusting their retirements to a privatized system. They advocated an increase in the maximum annual contribution and its tax deductibility. 'The public would gradually become more familiar with the private option,' they wrote. 'If that did happen, it would be far easier than it is now to adopt the private plan as their principal source of old-age insurance and retirement income.' In other words, it would provide a backdoor for privatizing Social Security. (Germanis has since emerged as a cogent critic of conservative economics. Butler served at Heritage until 2014 and is currently a scholar in residence at the Brookings Institution; he told me in March that he still believes in parallel systems of private retirement savings as we have today, but as 'add on' savings rather than a substitute for Social Security.) Cato, a think tank co-founded by Charles Koch, has never relinquished its quest to privatize Social Security; the notion still occupies pride of place on the institution's web page devoted to the program. In 2005, when I attended a two-day conference on the topic at Cato's Washington headquarters, Michael D. Tanner, then the chair of Cato's Social Security task force, explained that Cato wasn't concerned so much with the system's fiscal and economic issues as with its politics. Its goal, he stated frankly, was to unmake FDR's New Deal. 'This is about whether we redefine a relationship between individuals and government that we've had since 1935,' he told me. 'We say that what was done was wrong then, and it's wrong now. Our position is that people need to be responsible for their own lives.' Yet forcing dramatic change on a program so widely trusted and appreciated is a heavy lift. That's why Republicans have tried to downplay their intentions. Back in 2019, for instance, Sen. Joni Ernst (R-Iowa) talked about the need to hold discussions about Social Security's future 'behind closed doors.' Secrecy was essential, Ernst said, 'so we're not being scrutinized by this group or the other, and just have an open and honest conversation about what are some of the ideas that we have for maintaining Social Security in the future.' As I observed at the time, that was a giveaway: The only time politicians take actions behind closed doors is when they know the results will be massively unpopular. Raising taxes on the rich to pay for Social Security benefits? That discussion can be held in the open, because the option is decisively favored in opinion polls. Cut benefits? That needs to be done in secret, because Americans overwhelmingly oppose it. Curiously, Trump and his fellow Republicans seem to think that attacking Social Security is an electoral winner. Possibly they've lost sight of the program's importance to the average American. Among Social Security beneficiaries age 65 and older, 39% of men and 44% of women receive half their income or more from Social Security. In the same cohort, 12% of men and 15% of women rely on Social Security for 90% or more of their income. Notwithstanding that reality, Commerce Secretary Howard Lutnick recently asserted that delays in sending out Social Security checks or bank deposits would be no big deal. 'Let's say Social Security didn't send out their checks this month,' Lutnick said. 'My mother-in-law, who's 94 — she wouldn't call and complain.... She'd think something got messed up, and she'll get it next month.' He claimed that only 'fraudsters' would complain. I had a different take. Mine was that even a 24-hour delay in benefit payments would have a cataclysmic fallout for the Republican Party. It would be front-page news coast to coast. There would be nowhere for them to hide. While bringing misery to millions of Americans, a delay — which would be unprecedented since the first checks went out in 1940 — would be a gift for Democrats, if they knew how to use it. Where will we go from here? The current administration has already done damage to this critically-important program. An acting commissioner Trump installed briefly interfered with the enrollment process for infants born in Maine—an important procedure to ensure that government benefits continue to flow to their families—because the state's governor had pushed back against Trump in public. In July, the newly-appointed Social Security commissioner, Frank Bisignano, allowed a false and flagrantly political email to go out to beneficiaries and to be posted on the program's website implying that the budget reconciliation bill relieved most seniors of federal income taxes on their benefits. It did nothing of the kind. To the extent that Social Security may face a fiscal reckoning in the next decade, the most effective fix is well-understood by those familiar with the program's structure. It's removing the income cap on the payroll tax, which tops out this year at $176,100 in wage income. Up to that point, wages are taxed at 12.4%, split evenly between workers and their employers. Above the ceiling, the tax is zero. Remove the cap, and make capital gains, dividends and interest income subject to the tax, and Social Security will remain fully solvent into the foreseeable future. Trump and his fellow Republicans don't seem to understand how most Americans view Social Security: as an 'entitlement,' not because they think they're getting something for nothing, but because they know they've paid for it all their working lives. As much as the system's foes would like it to go away, as long as the rest of us remain vigilant against efforts to 'redefine a relationship between individuals and government' established in 1935, we will be able to celebrate its 100th anniversary 10 years from now, in 2035.
Business Journals
11 minutes ago
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Opportunity Zone tracts that could be in play across Los Angeles
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Explore All Events In the original program, passed during President Trump's first term as part of the Tax Cuts and Jobs Act of 2017, 42,176 census tracts were eligible to become designated Opportunity Zones. Ultimately, governors in each state and territory picked 8,764 of those locations to receive the tax-advantaged investments made possible by the program. In the new version of the Opportunity Zone program, Congress narrowed the definition of "low-income community" to census tracts with a median household income that does not exceed 70% of an area's median income, down from an 80% threshold previously. A census tract also would be eligible if it has a poverty rate above 20%. Congress also removed the ability of governors to nominate census tracts that would not otherwise be eligible but were allowed in the previous edition of the program because they were 'contiguous' to an eligible tract. Eliminating those tracts in the program's new version shrinks the eligibility pool even further. The federal government has not yet published an official list of eligible tracts under the new law. But, according to an analysis of census tracts and the most recently available poverty data by The Business Journals, about 26,000 tracts appear to meet the eligibility criteria for an Opportunity Zone designation under the parameters of the revamped program. If governors were to then pick the maximum-allowed 25% of those sites to be Opportunity Zones, that would mean about 6,500 zones in the program — a nearly 26% drop from the number of available sites in the program's first iteration. That figure is in line with other estimates that have found the number of eligible Opportunity Zones could fall by more than 20% under the new law. To determine the estimated number of zones that could be available locally under the new version of the program, The Business Journals analyzed the 2025 Census Bureau list of all tracts and applied the new eligibility rules to those tracts. The analysis included poverty rate data from the Census Bureau's American Community Survey. In and around Los Angeles, more than 1,300 census tracts appear to qualify under the new criteria. Here's a look at the number of eligible tracts by county, according to The Business Journals' analysis: Los Angeles County: 846 tracts San Bernardino County: 159 Orange County: 138 Riverside County: 131 Ventura County: 44 New rules expected to fuel fights For Jacob Naig, a real estate agent, contractor and Opportunity Zone investor in Des Moines, Iowa, having fewer tracts means every mayor, chamber of commerce official and developers' coalition is going to have to fight harder to ensure their areas are included in the program. 'Look for polished census tract pitch decks, not only letters from governors' offices," Naig said in an email. "In Iowa, I can already see Des Moines, Cedar Rapids, Davenport and who knows where else jockeying for a limited pool of urban tracts, while rural counties protest that they were forgotten last time and need a carve‑out.' Naig said there also are upsides to fewer Opportunity Zones. The changes should ensure that capital can go to truly distressed regions and not so-called 'tourist' areas as in the previous version of the program — places where no subsidy was truly needed to get developers to build. He also thinks states will devise clearer, more-transparent scoring rubrics, such as highlighting jobs or vacancy rates, to protect Opportunity Zone nominations from political blowback. He anticipates cities and states will pile on additional benefits such as facade grants, expedited permitting or special taxation zones, as well. 'States will codify what was previously ad hoc, and locals will create packages of incentives to sweeten tracts that appear scary on paper,' Naig said. Where Opportunity Zones could be located Some states will have many more eligible census tracts than others, according to The Business Journals' analysis. California tops all states in our estimate, with 2,738 census tracts that appear to be eligible, followed by Texas with 2,492 and New York with 1,649. Vermont, on the other hand, has just 19 such census tracts, according to our estimate, followed by Wyoming with 29 and Arkansas with 30. At a more-local level, the most-populous counties are at the top of the list for eligible number of census tracts, according to The Business Journals' analysis. That means Los Angeles County, with 846 tracts that appear to be eligible, followed by Chicago's Cook County, with 528. Harris County (Houston) in Texas has 526 eligible tracts, followed by New York's Kings County (Brooklyn) and Wayne County (Detroit) in Michigan. What will change for the program The new Opportunity Zone program calls for governors to identify their targeted sites by July 1, 2026, and for the program to officially open for investment on Jan. 1, 2027. That might seem like a lengthy timeline, but experts say business owners, landowners, investors and local-government officials should be taking action now — especially since the sun-up to designating new zones is likely to be a time of intense lobbying. Blake Christian, CEO at builder MIT Modular and an Opportunity Zone expert, said lobbying during the first round of the Opportunity Zone program was not pronounced because people were less aware of the full scope of the program and its potential. Governors ended up picking tracts that were already developed or were poorly suited to attract investment. Not this time, Christian said. 'Local lobbying has already begun, and with rural census tracts now more directly competing with urban areas, governors will be getting more public input than they may want,' Christian said. The original Opportunity Zones program saw about $89 billion in qualifying equity investments across 5,600 census tracts through the end of 2022, according to a working paper by the Economic Innovation Group — with expectations those investments will eventually total more than $100 billion. The group additionally noted that Opportunity Zones ultimately were responsible for a net increase of 313,000 housing units over a five-year period. Ahmed Whitt, director of the Center for Wealth Equity at Living Cities, said the new limitations on eligibility will likely discourage some real estate projects that contributed to the issues of gentrification and oversupply that plagued the program previously. 'We'll see more-intense lobbying, especially for select urban neighborhoods,' Whitt said. 'Still overall, the changes in 2.0 are likely to create a more-effective program by focusing on areas that truly need both investment and have growth potential.' Stay on top of the latest real estate news by signing up for The National Observer: Real Estate Edition.
The Hill
11 minutes ago
- The Hill
Trump's China deal on AI chips prompts significant security concerns
President Trump's reversal on previously blocked chip sales to China has sparked cries that the White House is selling out America's security concerns in a bid to raise revenue. Trump on Monday agreed to allow tech giants Nvidia and AMD to secure export licenses to sell their advanced artificial intelligence (AI) chips in China in exchange for a 15 percent cut of the profits. The White House said Tuesday that more such deals could be on the table. The unusual deal doesn't just raise legal questions. Experts say the U.S. should be wary of turning over American-made technology that could boost its adversary's AI capabilities, at a time when the two countries are fiercely competing for dominance. The security concerns appear to be a two-way street. China urged tech companies there to avoid any purchase of the chip, citing security issues. The move once again has Trump at odds with Congress's China hawks, who argue the administration is shortchanging America's national security interests to make a buck. Rep. Raja Krishnamoorthi (Ill.), the top Democrat on the House Select Committee on the Chinese Communist Party, in a statement said the most troubling part of the deal was a contradiction at the heart of the policy. 'The administration cannot simultaneously treat semiconductor exports as both a national security threat and a revenue opportunity,' he said. 'By putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee.' The same panel's GOP chair, Rep. John Moolenaar (Mich.), said there are 'questions about the legal basis' for such a deal. 'Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the Government to grant licenses to sell China technology that will enhance its AI capabilities,' he said in a statement. Greenlighting the sales marks a reversal for the Trump administration, which in April initially imposed restrictions on Nvidia's H20 chip and AMD's MI308 chip, effectively blocking shipments to China. Commerce Secretary Howard Lutnick has argued China is only receiving Nvidia's 'fourth best' chip, but this has done little to assuage concerns. The administration has increasingly taken up the mantle, supported by the semiconductor industry, that the U.S. should focus on boosting the adoption of U.S. technology abroad rather than imposing more stringent export restrictions. The reasoning follows that the best way to win the AI race is to keep China dependent on American-made chips and prevent Huawei from gaining ground both inside and outside of China. Others contend this will simply boost Beijing's capabilities in a way that would be impossible without the U.S. technology. 'We've got to realize we're in an intellectual war, a technology war with China, and we're in an AI competition. Having Nvidia providing this technology to China is a mistake,' Rep. Don Bacon (R-Neb.) said during an appearance on 'The Hill' on NewsNation. 'China getting our chips is not a good deal.' National security experts say the risks are manifold. Not only do the sales boost China in what many see as a technological cold war, it also opens the door to the risk the communist government could use chips for military technology or other uses that directly threaten the U.S. Liza Tobin, who served as China director at the National Security Council under the first Trump and Biden administrations, said chip producers only have so much capacity, so shipping them to China shortchanges others. 'It's putting a priority on China's AI development at the expense of American or other countries' AI development,' she told The Hill. She also expressed concern over chips being used for 'malign purposes that potentially harm and kill American men and women in uniform.' 'These chips themselves are inherently dual use. It's not like these are just made for the military or have some limit on them to only be allowed for cat food apps. That's just not how it works.' Nvidia on Tuesday argued the sales will help the U.S. become a technology leader with little risk to either party. 'As both governments recognize, the H20 is not a military product or for government infrastructure,' the company said in a statement. 'China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China. Banning the sale of H20 in China would only harm U.S. economic and technology leadership with zero national security benefit.' Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace, said the export control licenses Trump is now negotiating with companies were expressly designed to weigh those types of national security risks. 'It's a very troubling precedent because historically when we've been looking at export control licenses, it's been strictly speaking a national security review,' Harrell said. 'Does the export of this widget threaten U.S. national security? Whereas now, there's also going to be this factor of, 'Well maybe it does threaten U.S. national security … but hey, we got some money from it.'' 'I think it would be quite negative for us if we get in the business of 'We're happy to arm our adversaries as long as they pay us a bit of money to do so.' I hope that's not where we are. I do worry that this could become a broader precedent.' White House press secretary Karoline Leavitt said Tuesday that the administration would consider other similar arrangements in spite of legal concerns. 'Right now, it stands with these two companies. Perhaps it could expand in the future to other companies,' Leavitt said. 'I think it's a creative idea and solution. The legality of it, the mechanics of it is still being ironed out by the Department of Commerce.' 'This was another idea of the president and his brain trust on his trade team to try to get good deals for the American people and the American taxpayer,' she added. It's not clear such deals would be legal. Export taxes are barred by the Constitution, while fees for export licenses are prohibited under federal law. However, it's unclear whether the 15 percent cut from Nvidia and AMD's chip sales would count as a formal tax or fee, as well as whether anyone would bring such a challenge. Still, several raised concerns about the precedent set by the deal, noting there are many other American-made products China would be interested in purchasing that could be detrimental to U.S. interests. 'Are we now going to see the Commerce Department shaking down high-tech exporters generally for a 15 percent cut? Are we going to see the State Department, which regulates exports of defense weaponry, start shaking down defense exporters for a 15 percent cut?' Harrell asked. 'I have to assume that there would be some lines, maybe it is F-35s. Would he sell nuclear weapons? You have to think there are some lines that Trump wouldn't cross. But this is blowing past a bunch of past precedent, and I think suggests that whatever lines he does have that he would not be willing to cross are very, very different from the lines any previous president would have had.' Rep. Jake Auchincloss (D-Mass.) noted that Trump has also sought to bypass a law passed by Congress and signed by former President Biden that would block the popular app TikTok unless the China-based ByteDance sells the company. Born out of fears that Chinese law could require the app to hand over data on Americans, Trump has punted enforcement, signing three separate extensions. 'So now the US government is financially motivated to sell AI to China?' Auchincloss wrote on the social platform X. 'Makes me shudder to think what a TikTok deal might look like.' Tobin, however, said China is likely to set their sights on securing more advanced chips than the H20, including the Blackwell, which is still under development. Trump suggested Monday that he would consider making a deal on a reduced-capacity version of the Blackwell. Trump's dealmaking, Tobin said, will suggest to the Chinese that such things are now open to negotiation, a dynamic she warns the government is also using with Nvidia. China's warning not to immediately order Nvidia's chips serves a twofold purpose, she said, one that allows them to exert some control over the company while opening the door to demanding information about the chips that could aid in their replication. 'They know there are technical means that could potentially be weaponized,' she said, adding that while China has 'rational' security concerns, the move is also 'a pretext for squeezing out more from Nvidia' by a country that has previously required companies to share their intellectual property. 'The Chinese government has already been calling Nvidia in to explain whether its chips are secure, and that's a way to put Nvidia on notice and say, 'Hey, you better be behaving the way we want you to, or else we're going to make it very painful for you to stay in the China market.'' Nvidia has previously said it would not send 'any [graphics processing unit] designs to China to be modified to comply with export controls.' 'Our products are extraordinarily complex and take tens of thousands of engineering years to create, and by the time an NVIDIA product is available in the market, we are already far along in our design of the next one,' a spokesperson said Tuesday. Any Chinese advances may mean the deal may only be of short-term value to Nvidia, Tobin argued, but it's one she said the government should shield against. 'The role of government is to put the guardrails on so that private interests don't control our national security,' Tobin said.
