As we enter the last stretch of the year, here are some upcoming changes and updates that will be enacted with the Social Security program in the new year that are worth taking note of.
Cost of Living Adjustment for 2026
Once a year, the Social Security Administration (SSA) adjusts all benefit amounts in order to counter the effects of year over year inflation. This is known as the COLA increase and the announcement for it is made in October. The COLA is determined by comparing the CPI-W for the third quarter of the current year against the CPI-W of the same period of the previous year. If there is an increase, this becomes the COLA for the new year.
The 2025 COLA came in at 2.5% and as a result, all benefits were increased accordingly in January. Experts such as the Senior Citizens League and Mary Johnson have estimated that the 2026 COLA will come it at 2.7% based on the data available to date. However, since the third quarter of the year is still in progress, this figure is subject to change. The SSA will officially announce the 2026 COLA on October 15th once the September data becomes available.
Final Full Retirement Age increase in 2026
Social Security can be claimed from age 62, however, claiming at this age is considered as claiming early and as a result, your benefits will be subject to a reduction of up to 30%. This is because of the Full Retirement Age that is in place in the program to maintain its financial health. The Full Retirement Age was previously 65 years of age, however, it has been gradually increasing in two month increments following the 1983 amendments. This was done to account for growing life expectancy and as per the amendment, the Full Retirement Age will stop increasing once it reaches 67 years of age.
The Full Retirement Age will increase for one final time in 2026, bringing it up to 67 years of age for those born in 1960 and later.
Social Security wage cap increase
Social Security is primarily funded through a dedicated payroll tax wherein the employer and employee will each contribute 6.2% of the employee’s earnings (12.4% total contribution). However, since there is also a maximum amount that the SSA will pay out in benefits, a limit on how much of your income is taxable has been put in place.
This is referred to as the wage cap and for 2025 it stands at $176,100. The wage cap is subject to year over year fluctuations relative to the national average wage index. As such, the wage cap is projected to increase in the new year. According to estimates from the Social Security Board of Trustees, the wage cap will be increased to $183,600 in 2026.
Earnings test
If you continue to work whilst collecting benefits, you may be subject to a retirement earnings test which could result in your benefits being reduced. This only applies if your supplemental income exceeds a certain threshold, and the threshold typically increases with each passing year. Additionally, the earnings test only applies if you have not yet reached your Full Retirement Age.
If you will not reach FRA for the full year the earnings limit is $24,360 and for every $2 earned above this limit, $1 in benefits will be withheld.
For 2025 and 2026, if you will be reaching FRA within the year, the earnings limit is $64,800 and for every $3 earned above this limit, $1 in benefits will be withheld for every month until FRA is reached.
Social Security credits
In order to qualify for benefits, you will need to earn Social Security credits throughout your working career. Your are allowed a maximum of 4 credits per year and you will need to have a minimum of 40 credits to qualify for benefits. In 2025, one credit equates to wages of $1,810 and in order to earn the maximum credits annually, you will need to have earned at least $7,240.
This figure increases on a yearly basis and will likely do so again in 2026.
Projected shortfall
The annual report from the Board of Trustees has revealed that the Old Age and Survivors Insurance trust fund is on a rather short road to insolvency if Congress does not intervene now. According to the report’s projections, the OASI trust fund will be emptied by 2033. At this point, automatic cuts to benefits will be triggered as the remaining revenue in the program would only be sufficient to cover 77% of all scheduled benefits.