U.S. retirees have seen their Social Security benefits adjust annually through a cost-of-living adjustment (COLA), which helps ensure that their purchasing power keeps pace with inflation.
However, recent trends show that the annual COLA is on a decline, and this trend might continue depending on the results of the upcoming presidential election.
If Vice President Kamala Harris wins, the outlook for the 2026 Social Security COLA could be different than if Donald Trump secures the presidency. Here’s why.
The Link Between Inflation and Social Security COLAs
The annual COLA for Social Security benefits is not directly set by the president but is influenced by economic factors, particularly inflation.
The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the COLA.
Each October, the SSA compares the average CPI-W for the third quarter of the current year with the average for the same period in the previous year.
If there is an increase, the COLA is adjusted upward by that percentage, rounded to the nearest one-tenth of a percent. If there is no increase, there is no adjustment to benefits.
In simple terms, if inflation rises, retirees get a higher COLA, and if inflation remains low or declines, the COLA remains lower.
How the 2026 COLA Could Be Affected by the Election Outcome
While Harris wouldn’t set the Social Security COLA herself, her economic policies could influence inflation, which in turn affects the annual adjustment. Here’s what top economists have to say:
Economists’ Predictions
In recent analyses, several major economic proposals from both Harris and her GOP opponent, former President Donald Trump, have been evaluated for their potential impact on inflation. The consensus among economists suggests that:
- 70% of leading economists believe that Trump’s proposed policies would likely result in higher inflation.
- Only 3% of the same group thought Harris’s policies would lead to greater inflation.
According to Moody’s, a prominent financial services company, Harris’s economic strategies would likely cause inflation to “moderate” and potentially decline to 2% by the summer of 2025.
In contrast, Trump’s policies, particularly his proposed tariffs, could increase inflation by 1.1% in 2025.
Why Harris’s Policies Might Lower Inflation
Economists believe that Harris’s economic plans would control inflation better due to their more conservative approach to trade and taxation.
By contrast, Trump’s plan to impose tariffs on imported goods, including up to 60% on Chinese products and potentially 100% on items from Mexico, could drive up prices.
Tariffs often result in higher consumer costs as importers pass along the expenses to buyers, leading to increased inflation.
Are Lower Social Security COLAs Good for Retirees?
If Kamala Harris wins the presidency, and her economic policies result in lower inflation, the Social Security COLA for 2026 could be smaller.
But does that mean lower COLAs are bad for retirees? Not necessarily.
Here are two reasons why lower COLAs could be beneficial:
1. Lower Inflation Benefits Purchasing Power
Social Security COLAs aim to keep up with inflation, but they don’t adjust in real time. Retirees usually feel the impact of higher costs before their benefits are adjusted.
With lower inflation, retirees might have lower living costs, which means they wouldn’t need a large COLA to maintain their purchasing power.
Thus, retirees could find themselves in a better financial position with stable or reduced inflation, even if it results in lower benefit increases.
2. The CPI-W Doesn’t Fully Reflect Retiree Expenses
The CPI-W used to calculate COLAs isn’t always representative of the expenses retirees face. For instance, healthcare costs, which are a significant expense for older adults, aren’t weighted as heavily in the CPI-W.
Lower inflation could keep general costs stable, even if the COLA doesn’t fully address specific expense categories like medical bills.
However, lower inflation could still mean less of a gap between what retirees receive and what they spend.
External Factors Could Change Everything
While economic forecasts suggest that Harris’s presidency might lead to lower COLAs due to reduced inflation, there are no guarantees.
Multiple unpredictable events can affect inflation regardless of who is in office, such as:
- Rising Oil Prices: Conflicts or disruptions in the Middle East can drive up global oil prices, leading to higher inflation.
- Supply Chain Disruptions: Strikes, pandemics, or global events can disrupt supply chains, resulting in increased costs for goods and services.
- Economic Crises or Pandemics: Unexpected crises, like the COVID-19 pandemic, can lead to massive inflation spikes, prompting larger COLAs.
These are the types of scenarios that have led to higher COLAs in the past and could potentially do so again, irrespective of which administration is in power.
The 2026 Social Security COLA will depend on how inflation trends in the coming years, which could be influenced by the economic policies of whoever wins the 2024 presidential election.
Top economists predict that Kamala Harris’s policies might control inflation more effectively than Trump’s, resulting in lower COLAs.
While some retirees might worry about lower benefit increases, a steady, low-inflation environment could actually enhance their financial well-being.
Ultimately, predicting COLAs involves more than just politics; it depends on the broader economic landscape, global events, and unforeseen crises.
It’s essential for retirees to stay informed and plan their finances with an understanding of how economic policies could affect their Social Security benefits in the future.
FAQs
Will Social Security COLAs be lower if Kamala Harris becomes president?
Economists predict that lower inflation under Harris could lead to smaller COLAs, but this is not guaranteed.
How are Social Security COLAs determined?
COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), reflecting changes in prices for goods and services.
Can tariffs increase inflation?
Yes, tariffs can drive up prices, leading to higher inflation, as costs are passed from importers to consumers.
Are lower Social Security COLAs a bad thing?
Not necessarily. Lower inflation means lower costs, which could help retirees even if COLAs are smaller.
Could unforeseen events change Social Security COLAs?
Yes, factors like oil prices, global supply chain disruptions, or economic crises can drive up inflation, leading to higher COLAs regardless of administration policies.
