2026 Social Security COLA Rises Modestly as Trump Signs Executive Order on Drug Prices
The Social Security cost-of-living adjustment (COLA) ticked up slightly as President Donald Trump signed an executive order yesterday to lower prescription drug prices, according to leading sources who provide monthly updates based on the latest inflation data.
Next COLA Update: Latest 2026 Social Security COLA Forecasts Match 2025’s Increase
Previous COLA Update: Steady, But Tariffs Could Bump Them Up Later
All COLA Updates: Social Security Cost of Living Adjustment (COLA)
Mary Johnson, an independent Social Security and Medicare policy analyst, forecasted the COLA estimate at 2.4%, but said this figure could still be less than the final 2026 number. Johnson last month predicted a 2.2% COLA adjustment.
Meanwhile, The Senior Citizens League (TSCL) also forecasted a 2.4% figure, up from its prediction of 2.3% last month.
While the COLA adjustment is higher than April’s prediction, Johnson believes Trump’s increase in tariffs last month is only just beginning its impact on raising consumer prices. The U.S. Bureau of Labor Statistics (BLS) reported this morning that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.1% over the last 12 months. For the month, the index rose 0.3% prior to seasonal adjustment.
Consumer prices, like groceries and especially meat and eggs, have remained pricier compared to other goods, Johnson states. The cost of housing, automotive repairs, and insurance have also been raised.
The only exception to growing costs is prescription drug prices, which have remained just 2.3% through April one year ago. This could be due to the Inflation Reduction Act, Johnson reasons, as the legislation mandates drug companies to pay Medicare rebates if drug prices rise faster than inflation.
“That provision, which was widely supported by Medicare beneficiaries could be restraining runaway drug prices,” says Mary Johnson, an independent Social Security and Medicare policy analyst.
Trump’s latest executive order on reducing price-gouging with insurance companies comes as new research shows the increasing amount seniors are paying for healthcare services. Upcoming findings from the TSCL’s 2025 Senior Survey report that 20% of older Americans are spending at least $1,000 a month on healthcare costs and 57% are making do with less than $2,000 a month in take-home income.
“President Trump’s executive order is a big step for Medicare’s ability to negotiate prices. American taxpayers should not be paying more than the price charged in other countries for the same drugs, especially those made by American companies,” said Shannon Benton, executive director at the TSCL. “American taxpayers shouldn’t have to subsidize the rest of the world’s healthcare while our own seniors are struggling to get by.”
Drug prices could continue to stay down, as a new $2,000 limit in 2025 is expected to cap how much plans could charge out-of-pocket for covered prescription medications.
Still, it’s unclear how Trump’s executive order on prescription drug pricing will impact lower costs for Medicare recipients. The executive order would match the cost of prescription medication in other countries where drug prices are negotiated by the government and are generally much lower as a result.
While the plan is favored by older Americans, its execution remains ambiguous. Johnson explains that because the executive order seems to focus on direct-to-consumer sales, Medicare recipients who receive coverage could end up seeing no change to their prescription drug prices.
Instead, the executive order would provide waivers for countries to import prescriptions where prices are lower, potentially further complicating tariff negotiations. “If that doesn’t muddy the waters enough, one has to wonder what effect tariffs would have on the final drug prices,” Johnson says.
‘Lowest since 2021’
The TSCL anticipates the 2026 COLA to be its lowest since 2021’s final figure of 1.3%.
The lagging adjustment, coupled with potential Social Security insolvency in the next decade, could risk pushing millions of seniors into poverty, Benton warns. The 2025 Senior Survey found that 39% of American seniors rely on Social Security for 100% of their income in retirement, and 93% are calling on Congress and the Trump Administration to prioritize Social Security benefits and Medicare.
“Our research puts numbers to what seniors have been telling us for years: Social Security benefits aren’t keeping up with inflation, inadequate COLAs are to blame, and seniors aren’t happy with Congress’s failure to act,” said Benton.
Further, 94% of seniors in the survey believed the 2024 adjustment of 2.5% was too low and stated their monthly Social Security checks would fall behind inflation. Only 5% of respondents described last year’s COLA as fair, and 1% said it was too high.
“If our predictions come true and the 2026 COLA comes in at the lowest we’ve seen since 2021, seniors will face additional pressure at a time when they’re already strained financially,” Benton concluded.
SEE ALSO:
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• Trump’s BBB to Accelerate Social Security, Medicare Insolvency by Another Year: CRFB
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
