Millions of Social Security beneficiaries wait for one specific announcement every year and that is the Cost-of-Living Adjustment (COLA). Every year, the Social Security Administration (SSA) makes adjustments to Social Security benefits to help beneficiaries keep up with the rising cost of the economy. This is referred to as the COLA.
The COLA for 2026 was announced to be 2.8% and even though this may look good on paper, but the increase on paper is not always the money that you receive at the end. It’s important to remember that Medicare premiums are deducted directly from Social Security checks and this may take away the 2.8% COLA increase.
With that being said, it’s important for retirees to be proactive to maximize their benefits.
Be Smart About When You Decide To Claim Benefits
One of the most important factors is deciding when to claim Social Security benefits. Yes, indeed, you can start claiming benefits from the age of 62. However, your Full Retirement Age (FRA) is the age where you are eligible for 100% of your benefits and if you wait further, till age 70, you will receive the maximum out of your benefits. It’s important for beneficiaries to understand that should claim benefits before reaching FRA, your benefits will be permanently reduced. Therefore, waiting till FRA or even age 70 will serve you well.
Go Through Your Earnings Record
Beneficiaries must understand that their Social Security benefits are calculated based on their 35 highest earning years. If the SSA finds missing years or if there is incorrect wage information recorded, your check can be permanently smaller.
It is therefore important for beneficiaries to ensure that they create an online Social Security account where they can review their wage history and make changes. If you need to, make sure that you contact the SSA via telephone or even visit your local office.
Work One Extra “Power Year”
To tie in with the above, if you are reaching retirement, consider working an extra year, this is especially important if you had a low-earning year or a year that was replaced with zero-earning. This will help in replacing those years and boost your 35-high earning years average which will in turn boost your Social Security benefit.
Be Sure To Budget For Medicare Increases
This is where many lose out. Medicare Part B premiums are automatically deducted from your monthly Social Security benefit every month therefore even though your Social Security benefits increase, most of the time, so does Medicare premiums. This increase eats away your COLA increase.
Do Not Be Complacent, Actively Engage with the SSA
There are many retirees who just wait for their monthly payments but it’s important to engage with the SSA. If you have any questions about your benefits or any errors in your records, be sure to ask directly. Make sure you get verified information and assistance that supports your personal needs. You can visit the SSA website for information and make use of your online Social Security account, which has tools that you can use to calculate your benefits. The more you engage, the better you understand your benefits.
Planning Ahead and Being Proactive
Even with all the strategies in place, it’s important for present and future retirees to plan ahead. Planning ahead will ensure that you have control over your finances and you are able to budget accordingly. For those living on fixed incomes, it’s important to plan your budget and try to reduce unnecessary expenses to ensure that your finances stretch as far as possible. You’d rather have a secure plan now so that you do not have to stress during retirement. Those are the years where you should enjoy the benefits of your years of hard work.