Social Security is changing in several ways next year — from how much you get, how it’s calculated, to how much of it you keep after medical costs. Here are five big changes coming in 2026 that retirees need to know to plan smartly.
1. Cost-of-Living Increase (COLA) Boosted
- The projected COLA (Cost-of-Living Adjustment) for 2026 is about 2.7%, up from 2.5% in 2025.
- For an average retired worker receiving around $2,008/month, that means roughly $54 more per month in benefits.
- But keep in mind: rising Medicare Part B premiums will reduce how much of that COLA you actually take home. About $21.50/month is expected to be deducted for Part B in 2026, which may consume nearly 40% of the COLA bump for many.
2. Full Retirement Age (FRA) Hits 67
- For those born in 1960 or later, the Full Retirement Age (age at which you receive 100% Social Security retirement benefits) will be 67 years in 2026.
- This completes the gradual increase from earlier rules: previously, for someone born in 1959, FRA was moving in two-month increases to 66 years and 10 months.
- If you claim retirement benefits early (e.g., at age 62), you’ll face larger reductions relative to FRA than if you were claiming closer to the new FRA. Longer delay past FRA still increases benefit via delayed retirement credits.
3. Higher Taxable Earnings Cap & Social Security Tax Implications
- The taxable-wage cap (maximum earnings subject to Social Security payroll tax) is projected to rise to about $183,600 in 2026, up from $176,100 in 2025.
- That means high earners will pay Social Security taxes on a higher portion of income, increasing their annual contribution to the system.
4. Earnings Test Thresholds Raised
- If you are drawing Social Security and still working and haven’t reached FRA yet, there’s a limit on how much you can earn without having benefits reduced. That threshold will increase in 2026.
- For people younger than Full Retirement Age for the full year, the threshold is estimated around $24,360. Exceed that, and benefits are reduced (typically in 2025 it’s $23,400).
- For those who reach FRA during the year, the threshold is higher — estimated $64,800 for 2026. Once you’re at FRA, there’s no limit on earning.
5. Trust Fund Solvency & Long-Term Risks
- The Social Security Trust Fund continues to face challenges. Without legislative changes, projections show it could become insolvent by 2033.
- “Insolvent” means that the Trust Fund would not have enough reserves, which could result in automatic benefit cuts, unless congress acts. Some estimates suggest a cut of about 23% could be required in that scenario.
Summary of Key Changes
| Change | What’s New in 2026 | Effect on Retirees |
|---|---|---|
| COLA Increase | ≈ 2.7% boost in Social Security benefits | A ~$54/month increase for average retired worker; partially eaten by higher Medicare premiums. |
| Full Retirement Age | 67 years for those born in 1960 or later | Must wait longer for full benefit; early claiming results in larger reductions. |
| Taxable Earnings Cap | Goes up to ~$183,600 | High-income earners pay more into the system; potentially small effect on take-home pay. |
| Earnings Test Limits | Thresholds higher: ~$24,360 (< FRA), ~$64,800 (year you hit FRA) | You can earn more without losing benefits; less penalty for working before FRA (up to a point). |
| Trust Fund Solvency | Projected exhaustion by 2033 if no reform | Risk of benefit cuts unless reforms address funding shortfalls. |
Retirees face a mix of opportunities and challenges in 2026: a modest COLA bump, changing retirement age expectations, and higher income and earnings thresholds.
But rising Medicare costs and the looming trust fund solvency concern could erode the benefits of some of these changes. Staying informed, planning when to claim benefits, and monitoring medical premiums are more important than ever.
FAQs
Will the COLA fully offset my rising living costs in 2026?
Probably not completely. Although a 2.7% COLA increase helps, costs like healthcare, housing, food, and energy may rise faster. Plus, higher Medicare premiums will reduce the net gain from the COLA for many retirees.
How does increasing the Full Retirement Age to 67 affect me?
If you were born in 1960 or later, you must be 67 to receive full Social Security retirement benefits. Taking benefits earlier results in a permanent reduction. Delaying past FRA increases monthly benefit via retirement credits until age 70.
Should I keep working while claiming Social Security?
It depends. If you’re not yet at your Full Retirement Age, working more may trigger earnings test deductions. In 2026, higher earning thresholds mean you can earn more before deductions start.
