Changes to Social Security Benefits Affecting Retirees in 2026

Washington, D.C. — The Social Security program will undergo changes next year that will impact benefits for retired workers. Millions of Americans rely on Social Security as a primary source of income. However, many misunderstand key aspects of the program, which could lead to financial missteps.

According to investment manager T. Rowe Price, nearly 19% of retired workers incorrectly believe that Social Security benefits do not adjust for inflation. Additionally, one-third of adults aged 50 to 61 answered the same question incorrectly. In fact, Social Security benefits receive annual cost-of-living adjustments (COLAs) to keep pace with inflation.

The upcoming COLA for 2026 is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, measuring inflation from July to September. The CPI-W recorded a 2.8% increase in the third quarter of 2025, resulting in a 2.8% rise in Social Security benefits next year. This increase is greater than the 2.5% hike retirees saw this year.

The average monthly benefit for retired workers will increase from $2,008 to $2,064, giving them an extra $56 per month. Spouses will see their average benefit rise from $954 to $981, equating to a $27 increase. Survivors will receive an average of $1,619, up from $1,575, for a $44 increase. Disabled workers will see their benefits go from $1,583 to $1,627, also an increase of $44.

The Social Security Administration will send COLA notices in December detailing the new benefit amounts and any deductions. Notifications will also be available online via the my Social Security portal.

However, a study by the Nationwide Retirement Institute revealed that 39% of surveyed adults mistakenly believe there is no cap on Social Security benefits. In actuality, benefits are capped based on earnings subject to Social Security’s payroll tax, which is limited to $176,100 in 2025. Benefits are calculated as a percentage of average inflation-adjusted monthly earnings within that limit.

Moreover, benefit amounts change based on when retirees begin collecting Social Security. Those starting at age 62 receive the smallest benefit, while those who wait until age 70 can receive the maximum, which will be $5,181 in 2026.

Another misconception highlighted by the Nationwide Retirement Institute involves early claimers who might have their benefits withheld if they earn above certain limits. In 2026, the lower limit for benefit withholding will increase to $24,480, while the upper limit will rise to $65,160. Once beneficiaries reach full retirement age, these limits no longer apply.

As for the future of Social Security, the Senior Citizens League projects that retirees may get a mere 2.7% raise in 2026, slightly higher than the previous year’s 2.5% increase. Yet, many retirees spend a significant portion of their income on housing or medical care, which have inflation rates higher than the projected COLA.

Most importantly, Part B premiums for Medicare are predicted to increase significantly in 2026, which could adversely affect retirees’ financial situations. With an average premium rise to $206.50 per month, retirees may find that their benefits increase is largely offset due to increasing medical costs.