First COLA prediction since tariffs is out; is it time to claim Social Security?

While most tariffs are now on pause until the summer, and could be delayed further, concerns remain about the inflationary pressure even the baseline 10% levies may have on prices, but how might COLA be affected?

With costs of everyday items and medicines set to increase, retirees on a fixed income may be concerned that the cost of living adjustment increase for 2026 might not keep up with inflation.

The Senior Citizens League released its latest COLA prediction Thursday, with its model predicting 2.3% which is up slightly from last month but 0.2 percentage points lower than in 2025.

TSCL executive director Shannon Benton is calling on the government to protect older Americans from the negative impact of inflation.

“Placing broad-based tariffs on goods from numerous countries could have a profoundly negative impact on the daily lives of seniors, including the costs of drugs and medical equipment that many seniors rely on. It is also highly likely that import taxes will keep food prices high, increase auto insurance costs, and contribute to higher inflation, among other effects,” she said.

A 2.3% increase in COLA would be the smallest since 2021.

InvestmentNews asked Johnson Investment Counsel managing director and senior portfolio manager Tony Kure how retirees should be preparing for a below-inflation COLA.

“Retirees should take a conservative approach when factoring Social Security benefits into their long-term financial plans. Given that COLA increases may not always keep pace with inflation, it’s wise to assume a more modest benefit growth rate—or even keep it flat—when modeling retirement cash flow,” he says. “For those still planning, considering other income sources and savings strategies can help ensure financial flexibility in the future. While there’s no immediate cause for concern, a prudent approach to retirement planning includes preparing for different scenarios to maintain long-term financial stability.”

Aside from COLA, there are also concerns around the ability of Social Security to provide the income that so many older Americans rely on. Does Kure believe that those eligible should start taking their benefits now, even if that means losing a potentially higher rate by delaying?

“While there are many factors to consider when deciding whether to take Social Security benefits early, concerns about the program running out of money shouldn't be a primary reason,” he warns. “Social Security is currently funded for at least the next 17 years, and there are many potential solutions to address long-term funding gaps. It’s unlikely that the government will stop sending checks, and the program is expected to survive in some form. Instead, individuals should base their decision on personal financial needs, health, life expectancy and other retirement income sources. Life expectancy and health are major considerations when it comes to taking benefits early. If there is concern for a short life span, expecting less than five years, one should utilize their Social Security.”

Kure added that he does not recommend taking Social Security benefits early except in cases where someone truly has no other options to meet basic needs like food or housing. Other options should be considered first when trying to navigate cost of living challenges to avoid weakening lifetime retirement income. But he notes that individual circumstances should always be a key factor.

On the broad issue of how spending cuts and other government policy may affect Social Security, how does Kure see things panning out?

“While changes may be made to adjust the program’s sustainability—such as modifying COLA or increasing the taxable wage base—it’s highly unlikely that Social Security itself will be subject to government spending cuts, given its role as a fundamental safety net,” he says.

However, that does not mean that retirees – and especially younger Americans planning retirement – should assume the status quo will be maintained as changes are still likely.

“Potential solutions include modifying the COLA, increasing the payroll tax rate or wage cap, gradually raising the full retirement age beyond 67, or extending the number of working years required for eligibility,” Kure suggests. “While news stories often highlight concerns about Social Security "running out of money," the reality is that a few targeted policy changes could extend its solvency for decades. Those over 50 are unlikely to see significant changes, while younger generations may need to plan for a slightly different benefit structure.”