The Social Security program has been a source of financial support to retired workers for close to a century now. Today, the program has grown to provide benefits to well over 70 million vulnerable individuals across the country, many of whom rely solely or primarily on their benefits to cover their monthly expenses. In order for such an important program to withstand the passage of time, change will often need to be implemented so as to increase the longevity of the program.
On October 24th, the annually anticipated Cost of Living Adjustment (COLA) announcement was made by the Social Security Administration (SSA) revealing a 2.8% increase to all benefits for 2026. Alongside this announcement are several other notable changes that will be implemented to the program starting next year. Here is what you need to know.
2.8% COLA boost for 2026
With the 2.8% COLA increase, the average retiree benefit will be increased by $56 to around $2,071 per month. A worker with a disability will receive a benefit bump of around $44 bringing the monthly average payout up to around $1,630.
The 2026 COLA is quite average from a historical standpoint, and even falls below average if considering only the COLAs of the last decade. A number of seniors may also feel the upcoming COLA fall short as Medicare Part B premiums are projected to face an 11.6% increase. This premium hike would eat away at around a third of the average COLA increase.
Wage cap increase
When paying into the Social Security payroll tax, there is a maximum taxable earnings policy in place. This means that there is a limit to your income that is considered when making your payroll tax contribution. This wage cap is determined relative to average wages and inflation.
In 2025, the maximum taxable earnings limit is $176,100, however, this will be increased to $184,500 in 2026. This increase will mainly affect those who had been earning at the current wage cap or higher as their contributions will now increase in the new year.
Maximum benefit increase
Due to the wage cap, the SSA also has a maximum benefit amount it will pay out. For a retiree claiming at full retirement age in 2025, the maximum benefit is $4,018. In 2026, the maximum benefit at full retirement age will increase by $134 per month to $4,152.
The absolute maximum benefit paid by the SSA in 2025 is $5,108 and in order to be eligible for this amount, the claimant will need to have earned an income equal to or higher than the wage cap for a minimum of 35 years whilst also delaying their retirement until age 70.
Retirement earnings limit
If you have claimed Social Security early and are still working, you will be subject to a retirement earnings test. If your income exceeds the stipulated thresholds, a portion of your benefit will be withheld until you reach full retirement age.
Once you reach full retirement age, you will be entitled to your full benefits regardless of how much of additional income you are earning. For 2026, the retirement earnings limits will be increased 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.
Work credit value increases
In order to claim benefits, you will need to have earned at minimum of 40 work credits by paying into the Social Security payroll tax. You can earn a maximum of 4 work credits each year, and the value of one work credit is $1,810 in 2025.
In 2026, the value of on work credit will be increasing to $1,890. This means that you will need to earn $7,240 for the year if you want to earn the maximum number of work credits in 2026.
Substantial gainful activity limits increase
In the new year, workers with disabilities will be able to earn a little bit more without having their benefits withheld. Much like the retirement earnings test, workers with disabilities have substantial gainful activity levels, which could result in reduced benefits if exceeded.
In 2025, non-blind workers with disabilities can earn up to $1,620 per month without having their benefits impacted. In 2026, this limit will be increased by $70 to $1,690 per month.
Blind workers who have long-term disabilities can currently earn up to $2,700 per month before their benefits are impacted. In 2026, this limit will be increased by $130 to $2,830 per month.