Six Social Security changes to expect in 2026

The year ahead will bring measured but meaningful adjustments to Social Security. Some affect today’s retirees through the annual cost of living increase and Medicare premiums. Others influence current workers through taxable wage limits, the earnings test, and the lifetime credits needed to qualify for benefits. A final shift completes the decades long rise in full retirement age. None of this requires a last minute scramble if you look at the changes through a planning lens and decide which levers matter for your household. The figures discussed here are based on publicly available projections and will be finalized later in the year. Treat them as planning placeholders and update your numbers when the Social Security Administration publishes the official 2026 limits.

The cost of living adjustment sets the tone for many retirees because it defines the headline change to monthly checks. Early estimates point to a modest increase of about 2.7 percent for January 2026, slightly above last year’s 2.5 percent pace. Modest is not insignificant. Using the average July 2025 retirement benefit of about 2,006 dollars and 69 cents as a baseline, a 2.7 percent increase would lift the average check by roughly 54 dollars and 18 cents per month or about 650 dollars per year. The emotional tension is familiar. A higher adjustment feels helpful at the household level but usually reflects a period of higher inflation. A lower adjustment eases the macro pressure but stretches day to day budgets. Remember that Medicare Part B premiums are typically deducted from Social Security for most enrollees. If the 2026 Part B premium rises by about 21 dollars and 50 cents as projected, the net increase to the average monthly benefit would be closer to 32 dollars and 68 cents. That is still progress, but it is tighter than the headline suggests. As a planner, I encourage clients to model their 2026 cash flow using the net figure rather than the gross adjustment so expectations are realistic.

For many readers, the bigger structural milestone in 2026 is the end of the glide path that began with the 1983 amendments to the Social Security Act. Full retirement age is the point at which you are eligible for 100 percent of your calculated retirement benefit. It has been transitioning upward from 65 to 67 in carefully staged birth year cohorts. If you were born in 1960 or later, your full retirement age is 67. If you were born in 1959, your full retirement age is 66 years and 10 months, which most people in that cohort will reach during 2025 or 2026 depending on their birth month. This final step matters because the size of the reduction for early claiming is calculated against your own full retirement age. Claiming at 62 will permanently reduce your monthly payment. The formula reduces your benefit by five ninths of one percent for each of the first 36 months before your full retirement age, then by five twelfths of one percent for additional months. On the other side, delaying beyond full retirement age earns delayed retirement credits that increase your monthly benefit by two thirds of one percent for each month you wait, up to age 70. Those credits stop accruing at 70, so there is no payment advantage to waiting beyond that birthday. This is where planning becomes personal. The right start date depends on your health, your spouse’s claiming strategy, your work plans, your savings, and your need for predictable income.

Workers will notice adjustments on their paystubs too. Social Security taxes fund future benefits and apply to wages up to an annual ceiling known as the taxable wage base. The cap increased from 168,600 dollars in 2024 to 176,100 dollars in 2025 and is projected to rise again to about 183,600 dollars in 2026. The employee share of the Social Security tax is 6.2 percent. If you earn at or above the projected ceiling in 2026, that increase would add roughly 465 dollars of Social Security tax for the year, bringing your total employee contribution to approximately 11,383 dollars and 20 cents. As always, Medicare taxes operate differently. The 1.45 percent Hospital Insurance tax applies to all wages with no cap, and higher earners pay an additional 0.9 percent on wages above 200,000 dollars if single, 250,000 dollars if married filing jointly, or 125,000 dollars if married filing separately. Employers withhold that additional Medicare amount when you cross the threshold. They do not match it.

Some people work and collect retirement benefits at the same time. If you claim before reaching your full retirement age, the earnings test can temporarily withhold part of your benefit when your job income exceeds an annual limit. The rules are designed so that withheld amounts are not lost. Your benefit is recalculated at full retirement age to credit back months that were fully withheld. Even so, the yearly limit matters for budgeting. For 2025, one dollar of benefits is withheld for every two dollars of earnings above 23,400 dollars. For those who reach full retirement age during 2025, the higher limit is 62,160 dollars and the withholding is one dollar for every three dollars earned over the limit until the month you reach full retirement age. Early projections for 2026 lift those thresholds a bit. If you will be younger than full retirement age for all of 2026, plan around an earnings limit in the mid 24,000 dollar range with the same two for one withholding rule. If you will reach full retirement age during 2026, plan around a limit near 64,800 dollars with the more generous three for one formula that only applies up to the month you hit full retirement age. Once you are at full retirement age, the earnings test no longer applies and you can earn any amount without a reduction in your Social Security payment.

Eligibility for benefits is rooted in credits earned over your working life. You need 40 credits to qualify for a retirement benefit, which typically equates to about 10 years of covered work. You can earn up to four credits per calendar year. The dollar amount needed to earn one credit adjusts annually with average wages. In 2024, each credit required 1,730 dollars of covered earnings. In 2025, each credit requires 1,810 dollars, which means 7,240 dollars earns all four credits that year. The amount will increase again for 2026. Once you have 40 credits, earning more credits does not raise your benefit. At that point, your benefit is driven by your highest 35 years of inflation adjusted earnings and the age at which you claim. This is an area where small administrative checks can protect large future dollars. Review your online Social Security Statement and earnings record at least once a year. If an employer reported your wages incorrectly or missed a year entirely, resolving it sooner is simpler and can prevent a lower benefit calculation later.

A separate but inevitable question is the long term outlook for the trust funds that support the program. Projections shift each year as the economy evolves, inflation rises or cools, and demographics play through the system. The key idea for personal planning is straightforward. Without legislative changes, the combined funds that support retirement and disability benefits are projected to be depleted in the early 2030s. If that happened on schedule with no policy fix, incoming payroll taxes would still cover most, but not all, of scheduled benefits. Analysts often describe the shortfall as a reduction of a little over one fifth of promised benefits. The estimate moves around by a point or two each year. Seven years sounds alarmingly close from the vantage point of 2026, yet the range of potential remedies is wide. Lawmakers have several tools that could be paired to address the gap, including tax adjustments, benefit formulas, or phased changes for younger cohorts. As a household, you cannot legislate, but you can decide to keep your savings rate healthy, avoid leaning on Social Security too early if you have flexibility, and build your plan so that a policy timeline does not force a lifestyle change.

How do these moving parts intersect with your long term goals. Start with the income sequence you want in retirement. If you are part of a couple, think about the survivor benefit and what happens to household income if one spouse passes first. A higher earner who delays claiming can increase that survivor amount for life, which is a quiet but powerful form of protection. Next, decide how much of your essential budget you want covered by guaranteed income sources such as Social Security and a pension if you have one. If the projected COLA is modest, the pressure often shows up in medical costs and housing. That does not mean you must overhaul your portfolio. It does suggest keeping a small cash buffer for Medicare premium increases and property tax cycles so you do not feel compelled to sell investments at an inconvenient moment.

A simple framework can help you organize actions between now and when the official 2026 numbers are released. Think in three layers. The first is eligibility and accuracy. Confirm your earnings record, count your credits, and make sure your contact details are current in your online Social Security account. The second is timing and tradeoffs. Map your likely claiming age against your health, work plans, and spouse’s benefit. If you anticipate working while receiving benefits, compare your expected wages to the projected earnings test thresholds and consider whether a later claim might preserve more of your monthly cash flow. The third is tax and cash flow. If you expect to earn above the projected taxable wage base in 2026, factor the higher 6.2 percent Social Security withholding into your bonus timing and your savings rate. If you are on Medicare, model next year’s Part B premium against your Social Security check so you know your net deposit amount in January.

Several practical questions tend to surface once you sit with the numbers. Should you change your 401(k) or IRA withdrawal plan because the COLA appears small. Usually the answer is no. A disciplined withdrawal rule that considers market conditions and your long term glidepath will matter more than a single year’s adjustment. Should you accelerate retirement because the full retirement age reaches 67 for your cohort. Not necessarily. Full retirement age is an anchor for benefit calculations but it does not define your life or your purpose. The right choice balances dollars and meaning. Should you delay Medicare because premiums rise. For most people, Medicare remains the most practical combination of coverage and cost. The Part B increase is a line item to plan for, not a reason to opt out.

Mark your calendar for mid October when the Social Security Administration typically announces the official cost of living adjustment and the final 2026 limits. When those are published, update your plan with the confirmed figures. Until then, it is sensible to use the estimates above as planning placeholders. If you are already retired, consider adjusting your automatic transfers in January so your checking account reflects your net benefit after the Part B deduction. If you are still working, consider whether the rising taxable wage base changes the timing of your year end bonus or stock vesting. If you will reach your full retirement age in 2026, ensure that your earnings assumptions and your benefit start date align with the more generous earnings test that applies in the months before you cross that threshold.

None of the projected 2026 adjustments require heroic changes. Retirement planning rarely rewards dramatic moves. It rewards alignment. If you treat the 2026 Social Security changes as a prompt to verify your records, calibrate your timing, and tune your cash flow, you will be doing exactly what a good plan requires. The program itself is designed to flex with wages and inflation over time. Your goal is to keep your household decisions just as flexible. In a year that may deliver a modest COLA, a slightly higher taxable wage base, and the final step to a full retirement age of 67 for younger cohorts, a quiet check in with your plan is not only adequate. It is wise.

The final suggestion is simply to revisit your assumptions twice a year. Once in early summer when you review your earnings record and health coverage, and once in the autumn when the official Social Security figures are announced. That cadence keeps your plan current without letting headlines dictate your choices. It also builds a helpful habit. Planning does not need to be loud to be effective. The smartest plans are consistent. And when the official numbers arrive, you will be ready to update a few cells, confirm your timing, and carry on.