The government has just updated the maximum Social Security benefit after announcing the 2026 cost-of-living adjustment (COLA). Starting January 2026, retirees, disabled workers, and their families will see monthly payments increase by 2.8%.
According to an announcement made by the Social Security Administration (SSA) on October 24, the maximum monthly Social Security benefit for workers who retire at full retirement age (FRA) will rise from $4,018 in 2025 to $4,152.
The announcement of the COLA was scheduled for October 15 but was delayed due to the ongoing federal shutdown, which briefly held up several economic reports and agency operations. The new COLA adjustment of 2.8% will now see seniors receive higher benefits to help them keep pace with inflation.
What the 2.8% COLA Means for Retirees
The COLA is intended to maintain the purchasing power of Social Security benefits amidst inflation. It is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation by comparing prices for goods and services from year to year.
For 2026, the average third-quarter CPI-W rose 2.8% from 2024 levels, leading to a 2.8% COLA. “Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security,” SSA Commissioner Frank J. Bisignano said in a statement.
According to SSA data, the average monthly benefit for all retired workers will rise from $2,015 to $2,071. Married couples filing together will see their payments increase to $3,208 from $3,120, while the average disabled worker’s benefit will rise from $1,586 to $1,630.
“The jury is still out regarding how the 2.8% COLA increase will help with some inflation and higher health care costs,” said Greg Farber, Executive Director and Wealth Planner at J.P. Morgan Wealth Management. “I feel it is an important time to check in with one’s financial advisor and review your personal plan.”
Other Key Social Security Changes Coming in 2026
Alongside the COLA, the SSA also has several other changes lined up for the coming year that will affect current retirees and those still working.
a. Full Retirement Age (FRA) Rises to 67
Besides the COLA, the SSA also announced that in 2026, the full retirement age (FRA) will officially rise to 67 for those born in 1960 or later. While workers can still claim retirement benefits as early as 62, they will receive reduced benefits for the rest of their retirement. Delaying past full retirement age until 70 will boost benefits by up to 8% per year.
b. Taxable Wage Base Increases to $184,500
The maximum amount of annual income subject to Social Security taxes will increase from $176,000 in 2025 to $184,500. This rise will see higher-income workers contribute more starting in 2026.
c. Earnings Limits for Early Retirees Are Rising
For retirees who decide to claim benefits before reaching full retirement age (FRA), the amount they can earn while still receiving retirement benefits is also increasing. Starting in 2026, those under FRA can earn up to $24,480 per year ($2,040 per month). For every $2 earned above that limit, $1 in benefits will be withheld.
The threshold will rise to $65,160 per year ($5,430 per month) for those reaching FRA in 2026. For them, $1 will be withheld for every $3 they earn over the limit until the month they hit full retirement age.
“These reductions can be a ‘rude wake-up call’ for beneficiaries who claim retirement benefits early and are unfamiliar with the rules,” said Bill Shafranksy, a certified financial planner at Moneco Advisors. “They not only could face a massive reduction to their benefit, but sometimes I’ve seen it where the benefit actually zeros out entirely.”
New Senior Tax Deduction and State-Level Changes
The 2.8% COLA has arrived alongside tax changes under the One Big Beautiful Bill that could affect retirees’ overall income. Under the OBBB, seniors aged 65 and above are eligible for a new $6,000 deduction or $12,000 for married couples.
Together with the standard deduction, this new tax deduction will help reduce taxable income, which could lower the amount subject to federal tax.
At the same time, state-level tax treatment of Social Security benefits is still evolving. West Virginia, one of the few states that still taxed benefits, plans to eliminate its taxes on Social Security benefits in 2026.