Social Security checks could increase by 2.4% next year based on Tuesday's consumer inflation report, according to estimates by an independent analyst.
Overall consumer prices increased 2.3% from a year earlier, down from 2.4% rise the previous month and the smallest annual increase since February 2021, according to the Labor Department’s consumer price index, a measure of average changes in goods and services costs. The so-called CPI-W subset of the consumer price report that's used to determine Social Security's cost-of-living increase rose 2.1%, down from March's 2.2% increase.
The official 2026 COLA will not be determined until October because it depends on inflation data from the third quarter, which is collected between July and September. But analysts often track the estimates in the months leading up to the crucial July through September timeframe.
A 2.4% COLA would be the smallest increase since 2020 and raise the average retiree benefit in April of $1,999.97 per month by about $48. In January, the average beneficiary received a 2.5% increase, which amounted to a $50 raise to $1,957, up from $1,907 in January 2024.
While the estimated 2.4% COLA increase is higher than last month’s forecast for 2.2%, it still may underestimate the final 2026 COLA, said Mary Johnson, independent Social Security and Medicare policy analyst.
"Trump Administration tariffs are only beginning to have an impact raising consumer prices," she said.
How could Trump's tariffs affect the COLA?
Though some of the highest of President Donald Trump's tariffs have been lowered or paused for now, economists still believe the ones in place will be enough to increase inflation soon.
The "de-escalation with China provided some near-term relief. But the reality remains that we will still likely see inflation peaking at 3% later this year and there remains significant uncertainty around what U.S. trade policy will look like beyond the next 90 days," said Mike Reid, senior U.S. economist at Royal Bank of Canada.
On Monday, China and the U.S. said they would pause their reciprocal tariffs for 90 days. Effective from Wednesday, the U.S. will temporarily reduce tariffs on China to 30%, down from 145%, and China will reduce tariffs on U.S. goods to 10%, down from 125%.
COLA should rise in line with any inflation increases.
What is CPI-W?
The Social Security Administration bases its COLA each year on average annual increases in the consumer price index for urban wage earners and clerical workers (CPI-W) from July through September.
CPI-W is a subset of the overall consumer inflation index that looks at the price inflation experienced by working adults younger than 62, Johnson said. The problem with that is younger working consumers spend their money differently than older people covered by Medicare. For example, economists estimate younger workers spend about 7% of their budget on healthcare costs, but research and surveys have indicated that older adults tend to spend on average 15% or more of their incomes on healthcare, she said.