Social Security benefits are a cornerstone source of income for millions of Americans each month. The amount a beneficiary is eligible to receive on a monthly benefit is determined using a variety of factors such as age at which you begin claiming and income earned during your working years.
As such, here are some upcoming changes to Social Security that beneficiaries should keep an eye out for.
Social Security COLA for 2026
Each year, the Social Security benefit amount is adjusted to account for the effects of inflation in order to allow the benefit to maintain its buying power. This increase is called the Cost Of Living Adjustment, or COLA. For 2025, the COLA was 2.5% and as a result, beneficiaries received a 2.5% bump to their benefit amount starting in January.
The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) which is released by the Bureau of Labor Statistics. In specific, the third quarter CPI-W data of the current year is compared to the third quarter CPI-W data of the previous year. If there is an increase, this percentage becomes the COLA for the upcoming year. The COLA is officially announced in October, however, predictions from The Social Security Board of Trustees has the 2026 COLA standing at 2.7%.
On the other hand, The Senior Citizens League (TSCL), as well as Mary Johnson, a Social Security and Medicare policy analyst, have both projected the 2026 COLA to be 2.5% — the same as this year’s COLA. According to TSCL’s 2025 Senior Survey, “80 percent of seniors thought 2024’s inflation was over 3 percent, which is higher than this year’s COLA of 2.5 percent.”
Subsequently, concerns are also being raised regarding the accuracy of the methods used to determine the COLA since Social Security beneficiaries are often seniors who live differing lifestyles than that of the urban wage earners and clerical workers of the CPI-W.
TSCL Executive Director Shannon Benton says, “Seniors should be concerned as inflation continues to tick upward. TSCL’s research shows that there’s a serious disconnect between the inflation the government reports and the inflation that seniors experience every day. If the government tells us that prices are rising faster, it’s likely that seniors are already feeling the crunch.”
Social Security tax on income
A significant source of funding for the Social Security program stems from payroll taxes, and as such, there is a maximum taxable earnings limit in place as stipulated by law. For the current year of 2025, the maximum taxable earnings limit stands at $176,100, however, this amount is subject to change in relation to changes with national wage levels. As such, trustees are projecting that by next year (2026), the maximum taxable earnings limit will jump to $183,600. Generally speaking, 6.2% of a workers earnings is put towards the Social Security program.
According to a report from the Nationwide Retirement Institute, when the statement, “Workers pay Social Security taxes on all of their income,” was posed to a groups of adults, 75% thought this to be true — when it is in fact false.
Full retirement age
Even though a senior citizen can begin claiming Social Security benefits from age 62, this is not their full retirement age and as a result, the amount they receive monthly prior to reaching the full retirement age decreases gradually. For seniors born in 1960 and later, the full retirement age is 67.
A lowered benefit can happen if the claimant has not yet reached their full retirement age and is still earning an income that exceeds the retirement earnings test (RET) amounts. There are two types of RET amounts, an upper RET limit, and a lower RET limit.
“The lower RET limit applies to Social Security recipients that will not reach FRA during the year. It is $23,400 in 2025. Workers in this category will have $1 in benefits withheld for every $2 in income above the limit. The upper RET limit applies to Social Security recipients that will reach FRA during the year. It is $62,160 in 2025. Workers in this category will have $1 in benefits withheld for every $3 in income above the limit,” as outlined by TheMotleyFool.
Additionally, much like the maximum taxable earnings limit, the RET limit is also subject to change in relation to changes with national wage levels.