Key Questions: What Are the Top Changes to Social Security in 2026?

Social Security remains a cornerstone of retirement planning for Americans across all wealth levels. Whether you are currently working and paying into the Social Security system, nearing retirement, or currently claiming benefits, understanding the latest changes for 2026 is essential. In this “Key Questions” installment, we summarize the most significant updates to Social Security that could have an impact on your financial strategy, regardless of your net worth.

1. Cost-of-Living Adjustment (COLA) 

Each year, Social Security benefits may be adjusted to reflect inflation through a cost-of-living adjustment. COLA has averaged approximately 2.6% over the past 20 years. It went as low as 0.0% in 2016 amid declining prices and as high as 8.7% in 2023, when inflation spiked after COVID disruptions.

The COLA for 2026 is 2.8%, which is slightly higher than the COLA for 2025 (2.5%). For an average retiree, this translates into an additional $56/month, resulting in an average monthly check of $2,071, up from $2,015 in 2025. For the average married couple, this translates into an additional $88/month, resulting in an average monthly check of $3,208, up from $3,120 in 2025. With the year-over-year Consumer Price Index (CPI) for all items rising 2.7% as of December 2025, some say that the COLA should help seniors mostly keep up. 

Social Security’s COLA is important because it helps retirees maintain purchasing power in an inflationary environment. Social Security is one form of guaranteed retirement income that has an annual inflation adjustment. Many other sources of guaranteed income, like traditional pensions, don’t tend to have inflation adjustments. Even modest COLA shifts can affect monthly benefit amounts for retirees, widows, and those receiving disability benefits. These annual adjustments can have a meaningful impact on annual income planning. 

While the Social Security COLA for 2026 will boost monthly benefit amounts for many retirees, it’s important to note that most Medicare recipients have their premiums automatically deducted from their Social Security benefits. This means that the net increase retirees see in their checks may be less than the headline COLA figure, as rising Medicare premiums can offset some or all of the additional income. As a result, careful budgeting and planning are essential to account for these healthcare-related deductions when assessing your actual benefit increase.

2. Changes in Full Retirement Age (FRA)

The phased increase in Full Retirement Age – the age at which an individual qualifies to receive 100% of their Social Security benefits – continues to shape claiming strategies. For those born in 1960 and later, the FRA is now 67. FRA has been gradually increasing from age 65 to age 67 in order to reflect longer life expectancies and to reduce the strain on the Social Security Trust funding status. Deciding when to claim your Social Security benefits can greatly impact the size of your monthly check. We’ve written about the Social Security claiming decision in the article Making Your Social Security Decisions.

3. Taxation Thresholds for Social Security Benefits

Despite President Trump’s campaign promises to lower the taxation of Social Security benefits, the One Big Beautiful Bill Act (OBBBA) did not change the existing tax thresholds for these benefits. For 2026, the thresholds remain unchanged. In 2026, if you are a single filer and your combined income is between $25,000 and $34,000, up to 50% of your Social Security benefits may be taxable. For single filers with combined income above $34,000, up to 85% of benefits may be taxable. If you are married filing jointly with combined income of between $32,000 and $44,000, up to 50% of your Social Security benefits may be taxable. For joint filers with combined income above $44,000, up to 85% of benefits may be taxable. Be mindful that rising income from investments or business interests can push more of your benefits into taxable territory. Proactive planning can help minimize the impact. Note that states have different rules regarding whether any Social Security benefits are taxable.

Instead of reducing the percentage of benefits subject to tax, the OBBBA introduced a new Senior deduction aimed at providing targeted tax relief for older Americans. This approach left the taxation structure intact while offering seniors an additional avenue to potentially lower their taxable income.

4. Earnings Limits for Early Claimants

If you claim Social Security before reaching FRA and continue to work, there are annual earnings limits. In 2026, these limits are expected to increase slightly, allowing early claimants to earn more before benefits are reduced. In 2026, Social Security is reduced by $1 for every $2 earned above $24,480 ($2,040/month), up from $23,400 ($1,950/month) in 2025. If you reach your FRA in 2026 and continue to work, the reduction is $1 for every $3 in earnings above $65,160 ($5,430/month) an increase of $3,000 over the 2025 limit of $62,160 ($5,180/month). There is no reduction if you continue to work past your FRA. 

This change is most relevant for individuals who plan to claim Social Security benefits before reaching their Full Retirement Age. This is particularly important for retirees who continue to work part-time or own businesses after starting their benefits.

5. Maximum Monthly Benefit Increases

The maximum monthly Social Security benefit for those retiring at FRA rises each year. For 2026, expect a higher ceiling, which is particularly significant for clients who have consistently earned at or above the Social Security wage base. In 2026, the maximum Social Security benefit for a worker who retired at full retirement age is $4,152/month, up from $4,108/month in 2025. This means that a retiree who qualifies for the maximum can receive more total income over their retirement years. This boosts retirement security and improves resilience against rising living costs. 

6. Social Security Tax Limit & Payroll Tax Adjustments

For current workers, these next two changes may impact you. 

The Social Security wage base — the maximum earnings subject to payroll taxes — tends to increase annually. For 2026, the Social Security wage base is $184,500, up from $176,100 in 2025 and an increase of $8,400. Employees who earn above the previous year's wage base will see more of their income taxed for Social Security, resulting in higher annual payroll tax contributions. This equates to paying $11,439 in Social Security tax at 6.2% for 2026, an increase of $520 over 2025. 

For current workers, an increase in the Social Security tax limit means that a greater portion of their earnings will be subject to payroll taxes. While this may lead to increased future benefits for high earners, it also means a slightly larger deduction from take-home pay for those affected. For most workers whose income falls below the wage base, this change will not have a direct impact on their paychecks.

7. Earning Social Security Credits

In order to qualify for retirement benefits, you must earn a minimum number of Social Security credits. In 2026, you must earn more to qualify for Social Security credits. To earn one credit in 2026, you must have wages or self-employment income of $1,890, and you must earn $7,560 to get four full credits (the maximum you can earn is four credits per year). In 2025, you only needed $1,810 to earn a credit, $80 less than what you will need to earn in 2026. Remember that you must earn 40 credits over your lifetime to become eligible for benefits.

8. Program Reform Discussions

While no major reforms are scheduled for 2026, ongoing discussions in Congress about the long-term solvency of Social Security could lead to changes in future years. We discussed the Social Security Trust Fund’s solvency in the article 2025 Social Security Trustees Report: Combined Trust Fund Projected to Deplete One Year Sooner than 2024 Estimate. We encourage investors to monitor these developments closely, as potential reforms could affect benefit calculations, taxation, or eligibility down the line.

Conclusion

Social Security updates in 2026 carry implications for nearly every client, from those building wealth to those protecting it. Staying informed enables proactive decision-making and ensures your retirement strategy remains robust in a changing landscape. We recommend that you evaluate how these changes affect your unique circumstances and wealth goals.

For more information, please contact your advisor.