Will the Pension Adjustment in the USA Be Smaller Under Kamala Harris?

The annual adjustment of social security benefits in the USA, known as the Cost-of-Living Adjustment (COLA), is facing a potentially significant change. For 2025, it is expected that the increase in pension benefits could be noticeably lower than in previous years. Interestingly, the influence of the upcoming presidential elections on this development is noteworthy. Kamala Harris, the current Vice President, has proposed plans that could lead to lower inflation if she wins the election. This affects the amount of the COLA, which is based on the inflation rate measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If inflation decreases, the pension adjustment is also lower, which may not necessarily be bad for retirees. Economists favor Harris's plans over those of her opponent Donald Trump, who could fuel inflation with high tariffs on imports. Despite the gradually declining inflation under Harris, according to Moody’s, there is no absolute certainty that COLAs will actually decrease. Unforeseen events such as geopolitical conflicts or pandemic crises could increase inflation. For retirees, a lower COLA could be advantageous because it means that living costs are more stable, ultimately providing financial relief. However, this is not guaranteed, as many factors—beyond politics—affect inflation and, consequently, the adjustments.