Social Security cost-of-living adjustment may be 2.5% in 2026, new estimate shows
The cost-of-living adjustment for Social Security could be 2.5% in 2026, based on the latest inflation data, new estimates show.
That's up from last month's estimate of 2.4%, said Mary Johnson, an independent Social Security and Medicare policy analyst who forecasts 2026 COLA using monthly inflation data. A 2.5% increase would be the same gain beneficiaries received this year, but there's still time for the 2026 estimate to rise because the full impacts of President Donald Trump's tariffs are still unknown.
"This estimate may rise with four more months of data still to come in before the 2026 COLA will be announced in October," Johnson said.
Even though May inflation remained tame, most economists predict Trump's tariffs will raise inflation, which in turn, boosts the COLA.
"Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
Ken Kim, senior economist at KPMG, sees inflation peaking above 4% annually in the fall.
That would be sharply higher than the 2.4% annual increase in the May consumer price index, a measure of average changes in goods and services costs.
The average monthly Social Security check in May reached a record high $1,948.17. Based on that, a 2.5% increase would raise the monthly benefit by about $40.70.
Roughly 75 million Americans, or about a fifth of the population, receive Social Security benefits.
COLA is an annual adjustment to benefits meant to keep beneficiaries' purchasing power from being eroded by inflation. The final COLA for the following year is typically announced in October by the Social Security Administration.
COLA is based on the percentage increase in the consumer price index for Urban Wage Earners and Clerical Workers from July through September of the last year as compared to the same three months of the current year. CPI-W tracks the overall inflation rate but can differ slightly.
In May, annual CPI-W rose 2.2%, compared with the 2.4% rise in overall consumer prices.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Social Security COLA may be 2.5% in 2026, but tariffs could lift it
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
32 minutes ago
- Yahoo
Israel launches 'preemptive' strikes on Iran
Israel carried out "preemptive" strikes against Iran on Friday, targeting its nuclear plant and military sites, after US President Donald Trump warned of a possible "massive conflict" in the region. Explosions were heard Friday morning in the Iranian capital, state TV reported, adding that Iran's air defence were at "100 percent operational capacity". Israel declared a state of emergency, with Defence Minister Israel Katz saying that retaliatory action from Tehran was possible following the operation. "Following the State of Israel's preemptive strike against Iran, a missile and drone attack against the State of Israel and its civilian population is expected in the immediate future," Katz said. Oil prices surged as much as 6 percent on the strikes, which came after Trump warned of a possible Iranian attack and said the US was drawing down staff in the region. "I don't want to say imminent, but it looks like it's something that could very well happen," Trump told reporters at the White House Thursday when asked if an Israeli attack loomed. Trump said he believed a "pretty good" deal on Iran's nuclear programme was "fairly close", but said that an Israeli attack on its arch foe could wreck the chances of an agreement. The US leader did not disclose the details of a conversation on Monday with Israeli Prime Minister Benjamin Netanyahu, but said: "I don't want them going in, because I think it would blow it." Trump quickly added: "Might help it actually, but it also could blow it." A US official said there had been no US involvement in the Israeli strikes on Iran. -- 'Extremist' -- The United States on Wednesday said it was reducing embassy staff in Iraq -- long a zone of proxy conflict with Iran. Israel, which counts on US military and diplomatic support, sees the cleric-run state in Tehran as an existential threat and hit Iranian air defences last year. Netanyahu has vowed less restraint since the unprecedented October 7, 2023 attack on Israel by Tehran-backed Hamas, which triggered the massive Israeli offensive in Gaza. The United States and other Western countries, along with Israel, have repeatedly accused Iran of seeking a nuclear weapon, which it has repeatedly denied. Israel again called for global action after the UN's International Atomic Energy Agency (IAEA) accused Iran on Wednesday of non-compliance with its obligations. The resolution could lay the groundwork for European countries to invoke a "snapback" mechanism, which expires in October, that would reinstate UN sanctions eased under a 2015 nuclear deal negotiated by then US president Barack Obama. Trump pulled out of the deal in his first term and slapped Iran with sweeping sanctions. Iran's nuclear chief, Mohammad Eslami, slammed the resolution as "extremist" and blamed Israeli influence. In response to the resolution, Iran said it would launch a new enrichment centre in a secure location. Iran would also replace "all of these first-generation machines with sixth-generation advanced machines" at the Fordo uranium enrichment plant, said Behrouz Kamalvandi, spokesman of the Atomic Energy Organization of Iran. Iran currently enriches uranium to 60 percent, far above the 3.67-percent limit set in the 2015 deal and close, though still short, of the 90 percent needed for a nuclear warhead. bur-hmn/tym
Yahoo
35 minutes ago
- Yahoo
Trump moves to block California electric cars program
US President Donald Trump on Thursday signed resolutions blocking California's landmark efforts to phase out gas-powered cars in favor of electric vehicles, a move the state immediately contested in court. Trump's action, a rebuke of Democratic climate change policies, comes after the Republican-led Congress revoked the state's waiver allowing it to set more stringent regulations for cars. California had planned to end the sale of gasoline-only vehicles by 2035, among other ambitious efforts. During the signing ceremony at the White House, Trump lashed out at the state's bid as "a disaster for this country" and said the resolutions he was signing would save the industry from "destruction." California swiftly sued the Trump administration over the resolutions, with Attorney General Rob Bonta saying: "The President's divisive, partisan agenda is jeopardizing our lives, our economy and our environment." "It's reckless, it's illegal, and because of it, we'll be seeing the Trump administration in court again for the 26th time," he added. California, the nation's wealthiest state with around 40 million people, has long used the waiver in the Clean Air Act to set its own emissions standards as it tries to mitigate some of the worst air pollution in the country. The size of the auto market in the state -- and the fact that several other states follow its lead -- means automakers frequently use its standards nationwide. Trump's move also came as he clashes with California over immigration enforcement. California Governor Gavin Newsom has accused the president of acting like a tyrant over his use of the military to control small-scale protests in Los Angeles. - Environmental concerns - Trump's action was condemned by environmental groups who say the rules are key for easing pollution. And Newsom recently argued that rolling back the state's EV ambitions would boost China's position on the market. While China is a manufacturing hub for such vehicles globally, the United States is a net importer of them, he said in a May statement. This is despite the United States being home to technologies that have pioneered the clean car industry, he noted. Trump has repeatedly criticized subsidies to encourage the EV industry despite significant federal funding allocated to projects in Republican districts -- where thousands of jobs are expected to be created. He took aim at the sector as part of his flurry of executive orders on his first day in office this January in a bid to ensure what he called a "level" playing field for gasoline-powered motors. hg-bys/md
Yahoo
an hour ago
- Yahoo
Hooters Makes Big Announcement After Abruptly Closing Over 30 Locations
On June 4 news broke that iconic restaurant chain Hooters abruptly closed more than 30 locations across 14 states. "Hooters will be well-positioned to continue our iconic legacy under a pure franchise business model," the company said in a statement to the USA Today. "We are committed to supporting our impacted team members throughout this process and are incredibly grateful to our valued customers for their loyalty and dedication to the Hooters brand." In a statement on the chain's website, Hooters made it clear the company isn't going out of business. "Hooters is here to stay, and with a stronger financial foundation and streamlined operations on the other side of this process, we will be well-positioned to continue delivering the guest-obsessed hospitality experience and delicious food our valued customers and communities have come to expect well into the future," a statement on the website read. Just a day later, Hooters revealed restructuring plans that would allow Hoot Owl Restaurants LLC to acquire more then 100 HOA-owned restaurants. In a press release, the company said it expected the store closures would occur before the transaction was finalized while it still expects approximately 200 domestic Hooters restaurants and 60 international Hooters restaurants to remain open. "We are confident that the acquisition will be finalized later this summer and we are excited to move forward into the next chapter of the Hooters brand," Neil Kiefer, CEO of Hooters Inc. said in a statement on behalf of the Buyer Group. "Decisions about store closures are never easy to make but all parties are completely aligned in bringing the necessary resources required to make the remaining 200 domestic Hooters locations as successful as possible. The Buyer Group has been extremely impressed with the restaurant-level employees of the restaurants they are acquiring and are excited to welcome them into the Hooters Inc. and Attila Wings organizations."Hooters Makes Big Announcement After Abruptly Closing Over 30 Locations first appeared on Men's Journal on Jun 5, 2025 Sign in to access your portfolio
