3 Social Security Changes Coming in 2026 May Surprise Retirees
Social Security is an indispensable financial safety net for most retired workers because the program offers guaranteed income for life. That means the purchasing power of benefits will theoretically remain constant even as other investment accounts such as IRAs and 401(k) plans are depleted.
Yet many Americans don’t understand basic aspects of the program, and knowledge gaps make financial planning difficult. For instance, while Social Security undergoes similar changes every year, recent surveys from T. Rowe Price and Nationwide Retirement Institute suggest changes coming in 2026 will surprise many Americans.
Read on to learn more.
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1. Social Security benefits will receive a cost-of-living adjustment (COLA) to account for inflation
Investment manager T. Rowe Price reports that one-third of Americans nearing retirement (aged 50 to 61) incorrectly marked this statement as true: “Social Security benefits do not adjust with inflation.”
Fortunately, that statement is false. Social Security payments receive annual cost-of-living adjustments (COLAs) based on changes in the Consumer Price Index, which is a common measure of inflation. COLAs help retired workers and other recipients keep up with rising prices across the economy.
The Social Security Board of Trustees estimates benefits will get a 2.7% COLA in 2026. The chart below shows how that would impact the average benefit paid to different Social Security recipients.
|
Beneficiary Type |
Average Benefit Before 2.7% COLA |
Average Benefit After 2.7% COLA |
Additional Monthly Income in 2025 |
|---|---|---|---|
|
Retired workers |
$2,002 |
$2,056 |
$54 |
|
Spouses |
$950 |
$976 |
$26 |
|
Survivors |
$1,567 |
$1,609 |
$42 |
|
Disabled workers |
$1,582 |
$1,625 |
$43 |
Data source: The Social Security Administration. Payment data from May 2025 was used as the average benefit before the hypothetical 2.7% COLA in 2026.
As a caveat, the Social Security Administration will use third-quarter inflation data (i.e., July through September) to calculate the 2026 COLA, which means the finalized figure will not be announced until later this year. So the figures shown in the chart are subject to change.
2. Some workers will pay more taxes into the Social Security program
Nationwide Retirement Institute reports that three-quarters of adults (aged 18+) incorrectly marked the following statement as true: “Workers pay Social Security taxes on all of their income.”
That statement is false. Social Security is primarily funded with payroll taxes, but the amount of income subject to taxation is limited under current law. The maximum taxable earnings limit is $176,100 in 2025, but that figure tends to increase each year to account for changes in national wage levels. For instance, the trustees estimate the maximum taxable earnings limit will rise to $183,600 in 2026.
Most workers pay 6.2% of their income to the Social Security program. So, if the trustees’ estimate is correct, the maximum tax burden will increase from $10,918.20 this year (i.e., $176,100 multiplied by 6.2%) to $11,383.20 next year. That means workers with income above the limit will owe an additional $465 in taxes in 2026.
3. Social Security recipients under full retirement age will be able to earn more money before benefits are withheld
Nationwide Retirement Institute reports that approximately half of adults (aged 18+) incorrectly marked the following statement as false: “Some of your benefits may be withheld if you’re still working before your full retirement age (FRA).”
That statement is true. Workers on Social Security will have some benefit income withheld temporarily if they are under FRA and have income exceeding the retirement earnings test (RET) amounts. That term is plural because there are actually two RET limits, as explained below:
- The lower RET limit applies to Social Security recipients that will not reach FRA during the year. It is $23,400 in 2025. Workers in this category will have $1 in benefits withheld for every $2 in income above the limit.
- The upper RET limit applies to Social Security recipients that will reach FRA during the year. It is $62,160 in 2025. Workers in this category will have $1 in benefits withheld for every $3 in income above the limit.
Importantly, RET amounts generally increase each year to account for changes in national wage levels. The trustee estimate the updated RET amounts for 2026 will be $24,360 and $64,800. That means Social Security recipients under FRA will be able to earn a little more money before benefits are withheld next year.