The end of year and beginning of the next is often a marker for change, and in the case of the Social Security program, this is indeed the case as well. The most notable change for Social Security beneficiaries in 2026 is, of course, the 2.8% Cost of Living Adjustment increase that will be implemented to benefit amounts as of January.
In addition to the COLA increase, retirees who are working while collecting benefits will be able to keep a bit more of their benefits in the new year as well. This is because the retirement earnings limits are also set to increase in 2026. Here is everything you need to know.
2.8% COLA increase for retirees in 2026
Following delays due to the ongoing federal government shutdown, the SSA finally announced the 2026 COLA increase on the morning of October 24th. Starting in January, all benefit amounts will be increased by 2.8% in order to account for year over year inflation. With this increase, the average benefit check will be increased by around $56.
Unfortunately for a number of retirees, close to a third of their COLA increase will be eaten up before their benefits even reach their bank accounts. This is because the Medicare Part B premium is also projected to increase in 2026. According to the Medicare annual report, the Part B premium is projected to face a staggering 11.6% increase. This will bring the cost of the premium up from $185 to around $206.50.
Medicare Part B premiums are deducted automatically from Social Security benefits and as such, a significant chunk of the COLA increase will lost once the premium hike offsets the COLA increase.
According to The Senior Citizen’s League (TSCL), “only 10 percent of seniors are happy with the amount they receive from their monthly Social Security checks, with many citing COLAs that lag inflation as a problem. TSCL’s research found that 94 percent of seniors said the 2025 COLA of 2.5 percent was too low and would cause their monthly checks to fall behind inflation.”
Retirement earnings limits increase in 2026
Despite retiring and claiming Social Security benefits, a number of seniors opt to continue working, perhaps out of necessity. If you have already reached your full retirement age (FRA), there is nothing to take note of and you may earn as much additional income as you would like and your benefits will not be impacted in any way.
If you have not yet reached FRA and are earning an additional income through working, you may be subject to a retirement earnings test. If your income exceeds the stipulated thresholds, your benefits will be reduced. The retirement earnings limit increases yearly relative to average wages and is slated to increase in 2026. This means that working seniors will be able to earn a bit more before their benefits are subject to a reduction.
It is also worth noting that this reduction is temporary and will be phased out as soon as you reach FRA. As such, here is a breakdown of the retirement earnings limits for 2026, as well as how the limits apply relative to FRA.
There are two retirement earnings limits in place and knowing which one applies to you depends on when you will reach FRA. If you have claimed benefits early and are working, your benefits will be subject to a reduction if your income exceeds a certain threshold. The limits are outlined as follows:
- If you are claiming benefits and working and you will not reach FRA for the full year, the earnings limit will be $24,480 in 2026 (increased from $23,400 in 2025). As such, for every $2 you earn above this limit, $1 of your benefits will be will be reduced.
- If you are going to reach FRA within the year, the retirement earnings limit will be $65,160 in 2026 (increased from $62,160 in 2025). As such, for every $3 you earn above this limit, $1 of your benefit will be lost.