From each year to the next, the Social Security program often undergoes some minor, yet consistent changes. These include the Cost of Living Adjustment (COLA) whereby benefits are increased relative to inflation, as well as changes to the maximum taxable earnings and the retirement earnings limit. Here is a breakdown of what to expect with the 2026 Social Security changes.
2026 COLA boost
The Social Security Administration (SSA) makes the highly anticipated COLA announcement each year in October. Despite minor delays due to the federal government shutdown this year, the SSA was still able to announce the 2026 COLA of 2.8% on October 24th. Whilst the 2026 COLA is marginally higher than the 2025 COLA of 2.5%, it still is below average, particularly when considering the COLAs of the past decade. Relative to the average retiree benefit of $2,008, the 2.8% COLA increase will add $56 per month to the checks of retirees starting in January.
Unfortunately, increases to other costs such as Medicare Part B premiums have also been confirmed for 2026, meaning that the COLA will be eaten away before benefits even reach some recipients. This is because the Medicare Part B premium is automatically deducted from Social Security benefits. In 2026, the cost of the Part B premium will be increasing by 9.7%, bringing the total up from $185 to $202.90. For a retiree earning the average benefit amount, close to a third of their COLA increase will be lost, whilst lower income earners could potentially lose their entire COLA increase to this premium hike.
“Especially since the pandemic, rising Part B premiums have been ruining seniors’ finances. The data shows that many older Americans already enjoy a lower standard of living than younger citizens, making a fulfilling retirement feel like a dream that’s further and further away,” senior advocacy group TSCL noted.
New maximum benefit for 2026
The SSA has a limit in place regarding how much it issues in payment to any one beneficiary. In 2025, the maximum benefit issued at full retirement age totals to $4,018, whilst the absolute maximum amount issued in benefits is $5,108, which applies to beneficiaries who delayed their retirement. When the 2.8% COLA increase takes effect in 2026, these figures will increase, however the COLA is not the sole reason for these increases.
The SSA also limits how much of your income it considers for your Social Security payroll tax contribution. This is known as the maximum taxable earnings or the wage cap. In 2025, the wage cap is $176,100, however, this will be increased to $184,500 in 2026. Since the wage cap is increasing, higher earners will be making larger payroll tax contributions and as a result, the maximum benefit will also likely increase. For instance, the maximum benefit at full retirement age will be increasing from $4,018 in 2025 to $4,152 in 2026.
New retirement earnings limit
If you have claimed Social Security prior to reaching full retirement age and are still working, you will be subject to a retirement earnings test. If your income exceeds the stipulated thresholds, a portion of your benefits will be withheld until you reach your respective full retirement age. The full retirement age is currently 66-67, whilst Social Security can be claimed from age 62. In 2026, the retirement earnings limit before your benefits are withheld will be increasing as follows:
- If you will not reach full retirement age for the full year, the earnings limit is $24,480 and for every $2 you earn above this limit, $1 of your benefit will be withheld.
- If you are going to reach full retirement age within the year, the earnings limit is $65,160 and for every $3 you earn above this limit, $1 of your benefit will be withheld.
It is also worth noting that these reductions are temporary and will phase out once you reach full retirement age. Upon reaching full retirement age, your benefits will be recalculated and you will eventually receive your withheld benefits as well. Once you reach full retirement age, you can earn an income of any amount and your benefits will not be impacted.