The countdown to next year’s Social Security Cost of Living Adjustment (COLA) has already begun, but this time the process is clouded with uncertainty. Recent staffing cuts at key agencies, President Trump’s abrupt firing of the nation’s top economic data chief, and the looming threat of tariffs driving inflation higher have all raised serious questions. Instead of a straightforward calculation, seniors may be facing a COLA figure shaped more by politics and turmoil than by actual cost-of-living needs. For millions of retirees who depend on these adjustments, the stakes couldn’t be higher. The big question now: can Americans trust the accuracy of the number that determines their monthly checks?
Cost of Living Adjustment
Social Security’s annual COLA calculation is a yearly review of economic data on prices. If the data shows that prices are rising, a COLA is issued. On the other hand, there is no COLA if prices are not increasing. The idea is to make sure social security recipients have enough money to maintain their purchasing power and avoid having to cut back on necessities.
COLA is determined in the third quarter of each year. The Consumer Price Index for Urban Workers (CPI-W) for the third quarter of the current year is compared to the third quarter of the previous year. If prices have risen, an increase in benefits or COLA is triggered.
We have just entered the third month of the third quarter, so the official COLA has not been posted. That will come in October and go into effect in January. However, The Senior Citizens’ League (TSCL) projects a 2.7% increase.
“With the COLA announcement around the corner, seniors across America are holding their breath,” says Shannon Benton, TSCL executive director. “While a higher COLA would be welcome because their monthly benefits will increase, many will be disappointed. TSCL’s research shows that many seniors believe the COLA does not adequately capture the inflation they experience.”
Guage for COLA Does Not Reflect Seniors’ Costs
The Social Security Administration began using the CPI-W to determine benefit adjustments in the mid-1970s. As an inflation gauge for working families, it seems to have worked well. However, as a measure of expenses for seniors, it is lacking.
For example, the CPI-W emphasises energy and electronics expenses. However, those costs are not as relevant to seniors’ expenses as housing and healthcare. We know this in part because, since the late 80s, the BLS has tracked senior expenses recorded as the Consumer Price Index for Americans 62 years of age and older (R-CPI-E). Additionally, it incorporated retrospective data to publish R-CPI-E reports dating back to 1982.
Seniors Cutting Back
Over half of seniors (52%) are cutting back on discretionary spending, while almost a third (31%) are forgoing essentials, such as groceries and medications, according to the Nationwide Retirement Institute 2025 Social Security Survey.
Further, the report found that 29% of those surveyed are dipping into savings to get by. Another 15% say they have sought part-time employment. Only 32% report that they have not made changes to their spending.
That same survey found that 59% of retirees agreed with the statement: “I am terrified of what the impact of tariff changes will do to my retirement income or retirement savings.”
A net of 68% of those surveyed (63% retirees, 70% non-retirees) believe tariffs will drive inflation beyond what a COLA can cover.
Tariffs Remain in Place
Nationwide’s survey was conducted before an appeals court ruled 7- 4 on Friday that most of Trump’s tariffs exceeded his authority under the Emergency Economic Powers Act. In May, the Court of International Trade also ruled that Trump’s tariffs were not enacted properly.
The appeals court ruling does not immediately end the tariffs. Instead, under the judgment, tariffs will stay in place until mid-October. That leaves the administration plenty of time to appeal the ruling to the Supreme Court. The high court has a history of doing Trump’s bidding, so waiting for a ruling may be a formality. However, if the court upholds the appellate court’s finding, tariffs are not dead.
Tariffs have not been deemed illegal. The way Trump enacted them is what has been judged illegal. The proper procedure for enacting tariffs is for the president to get approval from Congress. The same way Trump got his funding bill into law. Additionally, two other laws allow a president to levy tariffs: the Trade Act of 1974 and the Trade Expansion Act of 1962. They have some limitations, but they are workable for Trump’s purposes. As a result, the court action is a speed bump, not a stop sign for tariffs.
Benefits Don’t Cover Costs
Even if tariffs were abolished, seniors would still have trouble keeping up with rising prices.
A TSCL study released in June showed that “94% of respondents felt the 2025 COLA of 2.5% was too low and that their benefits grow more slowly than inflation.”
Almost all respondents (96%) favored a change in how COLAs are calculated, with 68% preferring switching to a price index that more accurately reflects prices on seniors’ expenses.
“Seniors also want to fund stronger COLAs and benefits for future generations by cutting loopholes in the Social Security payroll tax”, said Benton. “The data show their favorite method for doing so is eliminating the limit on earnings subject to Social Security payroll taxes, which is currently just a loophole that lets wealthy Americans pay less than their fair share into the program.”
Confusion and Chaos
Regardless of the figures used – CPI-W or R-CPI-E – obtaining accurate information is crucial for determining the COLA. This year, that may be harder.
Trump fired Bureau of Labor Statistics Commissioner Erika McEntarfer last month after a disappointing July jobs report.
“The other issue is we don’t know what the heck is going on over at the BLS anymore since Trump removed the BLS director,” Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, told Yahoo Finance.
“There are some questions about the quality of the data because of the DOGE cuts to staff, too,” she added. “The way they calculate inflation is by going around store-to-store and looking at that market basket of goods and figuring out how much each thing costs in these different areas. They might not have enough people to go and visit all those stores that they normally do.”
Even With a COLA Increase, You Could Get Less Money
One of Social Security recipients’ biggest expenses may negate a COLA increase.
Multiple sources show the growth of Medicare premiums outpacing COLA increases for years.
The Advisory Board cites analysis by Mary Johnson, an independent Social Security and Medicare policy analyst. She found that from 2005 to 2024, Part B premiums increased an average of 5.5% each year, while COLAs averaged 2.6%.
“This disparity is caused in part because Medicare costs are not included in the consumer price index that’s currently used to calculate the COLA,” Johnson said.
Our next installment examines Medicare premium increases and what to know before open enrollment begins on October 15th.
