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32 minutes ago
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A "Trump Bump" Is Being Forecast Into Social Security's 2026 Cost-of-Living Adjustment (COLA) -- Here's How Much Extra You Might Get
Key Points No announcement bears more importance to retirees than the annual cost-of-living adjustment (COLA) reveal in October. Estimates for Social Security's 2026 COLA are trending higher -- and President Trump looks to be the catalyst behind this boost. However, retirees have a lengthy history of getting shortchanged by Social Security COLAs, and a "Trump bump" in 2026 is unlikely to change this trend. The $23,760 Social Security bonus most retirees completely overlook › For an overwhelming number of retirees, Social Security provides more than just a monthly check. It's nothing short of a foundational puzzle piece to their financial well-being. In each of the last 24 years, Gallup has asked retirees to gauge the importance of their monthly benefits from Social Security. Consistently, 80% to 90% of respondents -- including 86% in April 2025 -- noted that their Social Security income was necessary, to some degree, to cover their expenses. For these individuals, nothing is more important than knowing how much they'll bring home on a monthly basis from America's leading retirement program. And no announcement bears more weight than the annual cost-of-living adjustment (COLA) reveal in October. While Social Security's COLA announcement is typically straightforward, benefits are expected to be influenced by something of a "Trump bump" for 2026. Why is Social Security's COLA so important for beneficiaries? Before digging into the potential boost beneficiaries could receive in the upcoming year, it's important to lay the groundwork for what purpose Social Security's cost-of-living adjustment serves and how the Social Security Administration (SSA) calculates it. Social Security's COLA is the tool the SSA uses to help beneficiaries avoid a loss of buying power due to inflation. For example, if a broad basket of goods and services regularly purchased by Social Security recipients increases in cost by 3% between 2024 and 2025, benefits would need to climb by a commensurate amount; otherwise, beneficiaries would be unable to buy as much. The cost-of-living adjustment increases benefits in an attempt to avoid a loss of buying power. Before 1975, there was no rhyme or reason as to when COLAs were passed along. Spanning 35 years (1940-1974), only 11 COLAs were implemented via special sessions of Congress. Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) became the inflationary tool used to calculate annual price changes. It has more than 200 separate spending categories with unique percentage weightings, which allow the CPI-W to be reported as a single figure each month. This makes for quick and concise year-over-year comparisons to determine whether prices are collectively rising (inflation) or falling (deflation). But the most interesting quirk of all with the COLA calculation is that only CPI-W readings from the third quarter (July through September) matter. If the average CPI-W reading in the third quarter of 2025 is higher than in the comparable period of 2024, beneficiaries can expect a higher monthly payout come 2026. Forecasts suggest a "Trump bump" will boost Social Security benefits in 2026 Social Security COLAs have been all over the map since 2010. During the 2010s, beneficiaries endured three years of deflation, during which no COLA was passed along (2010, 2011, and 2016), as well as the smallest positive COLA on record (0.3% in 2017). This was followed up by a 5.9% COLA in 2022, 8.7% in 2023 (the largest on a percentage basis in 41 years), 3.2% in 2024, and 2.5% in 2025. This sizable uptick in benefits on a year-over-year basis is reflective of a historic increase in U.S. money supply and, subsequently, the prevailing rate of inflation following the COVID-19 pandemic. With the average COLA over the last 16 years clocking in at roughly 2.3%, beneficiaries are crossing their fingers and hoping for a fifth consecutive year with an above-average payout boost in 2026 -- and they just might get it, courtesy of President Donald Trump's tariff and trade policies. Back in mid-January, less than a week before President Trump was inaugurated for his nonconsecutive second term, nonpartisan senior advocacy group The Senior Citizens League (TSCL) was forecasting a 2.1% cost-of-living adjustment for 2026. Meanwhile, Social Security and Medicare policy analyst Mary Johnson, who retired as a policy analyst from TSCL last year, was projecting a 2.2% COLA for 2026 as recently as mid-March. But following the release of the June inflation report from the U.S. Bureau of Labor Statistics last week, TSCL and Johnson have increased their 2026 COLA forecasts to 2.6% and 2.7%, respectively. This increase is prominently based on the expectation of modest inflation tied to President Trump's tariff and trade policies. For instance, Trump's tariff policy doesn't make much of a differentiation between output and input tariffs. The former are duties attached to finished products imported into the country, while input tariffs are affixed to goods used to complete the manufacture of a product in the U.S. Input tariffs have the potential to increase domestic prices and ignite inflation, which, in turn, can lift Social Security's 2026 COLA and provide a "Trump bump." How much extra should beneficiaries expect? Based on the latest forecast from TSCL, a 2.6% COLA would boost the average monthly benefit for retired workers, which topped $2,000 for the first time ever in May, by about $52. As for workers with disabilities and survivor beneficiaries, their monthly payouts would climb by about $41 next year. For the nearly 70 million beneficiaries currently receiving a payout from Social Security, Trump's impact on COLAs works out to approximately $9 extra per month in 2026, based on the difference in TSCL's COLA forecasts between mid-January (2.1%) and mid-July (2.6%), and Johnson's COLA projections from mid-March (2.2%) to mid-July (2.7%). Retirees regularly get the short end of the stick with Social Security COLAs If these estimates from TSCL or Mary Johnson prove accurate, beneficiaries will enjoy their fifth straight year with an above-average cost-of-living adjustment. Nevertheless, Social Security COLAs have a lengthy track record of disappointing retirees -- and the upcoming year is unlikely to break this trend. On one hand, switching to the CPI-W from a system that had no rhyme or reason for assigning COLAs prior to 1975 was an improvement. Conversely, the CPI-W has inherent flaws built in that continue to give retirees the short end of the stick. As this inflationary index's full name shows, it tracks the spending habits of "urban wage earners and clerical workers." These are traditionally working-age Americans who aren't currently collecting a Social Security benefit. More importantly, they spend their money quite differently than the 87% of Social Security beneficiaries who were 62 and older in December 2023. For instance, working-age Americans often spend more on education, apparel, and transportation than seniors. In comparison, people aged 62 and above spend a higher percentage of their monthly budget on shelter and medical care services than the typical working American. Unfortunately, the CPI-W doesn't provide added weighting to these important categories for retirees. The big issue is that the trailing-12-month inflation rate for shelter and medical care services has pretty consistently been higher than the annual COLA retirees have received. The modest Trump bump expected in 2026 isn't going to make a dent in the loss of purchasing power that retirees have been contending with. According to TSCL, the buying power of a Social Security dollar dropped 20% between 2010 and July 2024. Until the costs that matter most to retirees garner more weight in the inflationary index responsible for calculating Social Security's COLA or the spending categories that matter most see a significant reduction in their respective inflation rates, the purchasing power of a Social Security dollar is likely to wither. The $23,760 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. A "Trump Bump" Is Being Forecast Into Social Security's 2026 Cost-of-Living Adjustment (COLA) -- Here's How Much Extra You Might Get was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
'New kind of frontier': Shareholder proposals on AI becoming increasingly widespread
When Canada's most valuable companies hosted their annual general meetings this year, there was a new topic for shareholders to vote on among the usual requests to appoint board members and OK their executive compensation. The proposal from Quebec-based investor rights group le mouvement d'éducation et de défense des actionnaires centred on artificial intelligence. It asked 14 companies, including Canada's biggest banks, retailer Dollarama Inc. and telecom giant BCE Inc., to sign a voluntary code of conduct the federal government developed to govern the technology. Experts say the proposal is likely just the start of what they expect to become an annual phenomenon targeting the country's biggest companies — and beyond. "This is a new kind of frontier in Canada for shareholder proposals," said Renée Loiselle, a Montreal-based partner at law firm Norton Rose Fulbright. "Last year, this was not on the ballot. Companies were not getting shareholder proposals related to AI and this year, it absolutely is." Loiselle and other corporate governance watchers attribute the increase in AI-related shareholder proposals to the recent rise of the technology itself. While AI has been around for decades, it's being adopted more because of big advances in the technology's capabilities and a race to innovate that emerged after the birth of OpenAI's ChatGPT chatbot in 2022. The increased use has revealed many dangers. Some AI systems have fabricated information and thus, mislead users. Others have sparked concerns about job losses, cyber warfare and even, the end of humanity. The opportunities and risks associated with AI haven't escaped shareholders, said Juana Lee, associate director of corporate engagement at the Shareholder Association for Research and Education (SHARE). "In Canada, I think, in the last year or two, we're seeing more and more shareholders, investors being more interested in the topic of AI," she said. "At least for SHARE ourselves, many of our clients are making it a priority to think through what ethical AI means, but also what that means for investee companies." That thinking manifested itself in a proposal two funds at the B.C. General Employees' Union targeted Thomson Reuters Corp. with. The proposal asked the tech firm to amend its AI framework to square with a set of business and human rights principles the United Nations has. It got 4.87 per cent support. Meanwhile, MÉDAC centred its proposals around Canada's voluntary code of conduct on AI. The code was launched by the federal government in September 2023 and so far, has 46 signatories, including BlackBerry, Cohere, IBM, Mastercard and Telus. Signatories promise to bake risk mitigation measures into AI tools, use adversarial testing to uncover vulnerabilities in such systems and keep track of any harms the technology causes. MÉDAC framed its proposals around the code because there's a lack of domestic legislation for them to otherwise recommend firms heed and big companies have already supported the model, director general Willie Gagnon said. Several companies it sent the proposal to already have AI policies but didn't want to sign the code. "Some of them told us that the code is mainly designed for companies developing AI, but we disagree about that because we saw a bunch of companies that signed the code that are not developing any AI," Gagnon said. Many of the banks told MÉDAC they'll soon sign the code. Only CIBC has so far. Conversations with at least five companies were fruitful enough that MÉDAC withdrew its proposals. In the nine instances where the vote went forward, the proposal didn't succeed. It garnered as much as 17.4 per cent support at TD Bank but as little as 3.68 per cent at engineering firm AtkinsRéalis Group Inc. Loiselle said you can't measure the success of a proposal based on whether it passes or not. "The goal of these shareholder proposals is more for engagement," she said. Sometimes, even just by filing a proposal, companies reveal more about their AI use or understand it's an important topic for shareholders and then, discuss it more with them. While proposals don't always succeed, Lee has seen shareholder engagement drive real change. SHARE recently had discussions with a large Canadian software company. AI was central to its business but didn't crop up in its proxy statement — a document companies file governing their annual general meetings. The firm also had no board oversight of the technology. SHARE was able to get the company, which Lee would not name, to amend its board charter to include oversight of AI and commit to more disclosure around its use of the technology in its annual sustainability report. "This is a really positive development and it's leading to improvement related to further transparency," she said. If the U.S. is anything to judge by, Lee and Loiselle agree Canadian shareholders will keep pushing companies to adhere to higher AI standards. South of the border, AI-related proposals first cropped up around two years ago. They've targeted Apple, The Walt Disney Co. and even Netflix, where a vote on disclosing AI use and adhering to ethical guidelines amassed 43.3 per cent support. The frequency and spectrum of AI-related requests shareholders have has only grown since and is likely to be mirrored in Canada, Loiselle said. "The landscape for shareholder proposals is changing and I think that change is here to stay," she said. This report by The Canadian Press was first published July 21, 2025. Tara Deschamps, The Canadian Press Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Premiers to meet with Indigenous groups on first day of three-day Ontario gathering
HUNTSVILLE, ONT. — A three-day meeting of the country's premiers gets underway today, and the first item on the agenda is discussions with Indigenous groups. The premiers are gathering at Deerhurst Resort in Ontario's cottage country and trade and tariffs are expected to be the main topics, particularly when they meet Tuesday with Prime Minister Mark Carney. But first they are set to have discussions with leaders from the Assembly of First Nations, the Métis National Council and the Native Women's Association of Canada, among other Indigenous groups. That meeting comes as Indigenous communities have expressed concerns with federal and provincial laws meant to fast-track major infrastructure projects as a way to stimulate the economy facing tariff impacts. The federal law known as Bill C-5 allows cabinet to quickly grant federal approvals for big projects deemed to be in the national interest by sidestepping existing laws, while Ontario's Bill C-5 allows its cabinet to suspend provincial and municipal laws through the creation of so-called "special economic zones." Nine Ontario First Nations have filed a court challenge to the laws and are concerned there will not be meaningful consultation with them. Carney hosted a meeting with hundreds of First Nations chiefs last week and while some chiefs walked out saying they saw an insufficient response to concerns they'd been raising for weeks, others left the meeting "cautiously optimistic." Ford has said that over the course of the meeting this week, the premiers will also talk about emergency management, energy security, sovereignty and national security, health, and public safety. This report by The Canadian Press was first published July 21, 2025. The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
