Social Security rules change all the time in order to keep the program sustained for current and future retirees. It’s important for beneficiaries to understand these changes so that they are able to get the maximum out of their benefits.
-
COLA Increase (Your Annual Raise)
Every year the Social Security Administration (SSA) makes changes to Social Security benefits to help beneficiaries keep up with the rising costs of inflation. This is referred to as the Cost-of-Living Adjustment (COLA).
The COLA for 2026 was announced to be 2.8%. Even though this increase is slightly helpful, many seniors still struggle to keep with the increase in cost of living.
-
Higher Earnings Limit for Early Retirees
The other change is actually good news for anyone who has claimed Social Security before reaching Full Retirement Age (FRA) and still wants to work. Social Security puts a limit on the amount that retirees (claiming early) can earn before their benefits get deducted. This limit is increasing in 2026.
This simply means that:
- You can earn more money
- You can work more hours
- You won’t lose Social Security benefits as quickly
This allows early retirees to take on a small job or work part-time without worrying about their benefits being deducted.
-
Higher Maximum Taxable Earnings
The third change of Social Security actually affects people who are still working. Every year, Social Security taxes only apply to income up to a certain limit and this limit is increasing in 2026 to $184,500. People with higher earnings will thus have to pay Social Security taxes on a greater percentage of their income. In addition to strengthening the Social Security system as a whole, this might marginally increase future payments for people with higher incomes.
Now even though this change may not affect everyone, it will affect those who earn more that maximum taxable cap.
Now the Hidden 4th Rule: Medicare Part B Could Take Your Whole Raise
Most Social Security beneficiaries are happy when they hear the COLA announcement however, they don’t realise that Medicare is also deducted straight from Social Security. So, what exactly does this mean?
Even though the Medicare Part B premium amount for 2026 has not yet been disclosed by the Centres for Medicare and Medicaid Services (CMS), the standard Part B premiums is expected to increase by 11.6% to $206.50. This simply mean much of the COLA will be offset by this increase. In some cases, retirees end up seeing almost no increase in their actual check.
Why This Matters So Much
There are many retirees who look at COLA and assume that they are receiving the full amount of benefits, however Medicare Part B premiums is deducted directly from Social Security benefits, therefore the actual amount you receive is much less than what you expect. This is significant because:
- Healthcare costs continue to increase
- Medicare premiums are increasing faster than Social Security
- Unfortunately, COLA is sometimes insufficient for beneficiaries to get by
- Since many seniors live on fixed incomes, the increase may not help much as a result of the increase in cost of living
So even when there is a raise, it may not feel like one.
The Bottom Line
Social Security’s confirmed changes for 2026 include:
- A COLA increase to help retirees with the rising costs of the economy
- Higher earnings limits for early retirees who still work
- A higher taxable earnings cap for workers
The hidden and significant fourth rule is Medicare Part B premiums, even though you receive an increase in benefits, Medicare premiums can knock off that increase, and you may not see much in your final amount.
With that being said, it’s important for beneficiaries to plan ahead and budget accordingly for retirement.