Social Security Changes Set to Impact Retirees in 2026

WASHINGTON, D.C. — The Social Security program will see important changes in 2026 that could affect the benefits of millions of retired workers. With inflation rising, understanding these adjustments is crucial for retirees trying to budget their income.

Annual adjustments to Social Security benefits, known as Cost-of-Living Adjustments (COLAs), are designed to align benefits with inflation. In 2026, benefits will increase by 2.8%, slightly above the 2.5% hike from 2025, according to data from the Social Security Administration. This increase was largely influenced by Consumer Price Index-W data, which measured inflation at 2.8% during the third quarter of 2025.

Recent surveys conducted by T. Rowe Price revealed concerning gaps in knowledge among retirees. About 19% of retired workers mistakenly believe Social Security benefits do not adjust for inflation. Meanwhile, one-third of adults nearing retirement also answered incorrectly regarding this critical aspect.

The average monthly benefits for various types of beneficiaries will reflect this adjustment. For example, the average benefit for retired workers will rise from $2,008 to $2,064, providing an additional $56 a month.

COLA notices will be mailed by the Social Security Administration in December, and beneficiaries can also access their updated amounts through the my Social Security online portal.

Additionally, there is a common misconception about benefit caps. According to the Nationwide Retirement Institute, 39% of surveyed adults incorrectly believed there is no limit to Social Security payments. In reality, payments are capped based on taxable earnings, which are set at $176,100 for 2025.

Claiming age also plays a significant role in determining benefit amounts. Those who claim at age 62 will receive a maximum benefit of $2,969, while those who wait until age 70 can claim up to $5,181 in 2026.

Moreover, retirees intending to claim benefits early may face additional restrictions if their income exceeds the Retirement Earnings Test (RET) limits. In 2026, the lower limit will set at $24,480, while the upper limit rises to $65,160.

Importantly, any withheld benefits are gradually repaid once retirees reach their Full Retirement Age (FRA).

Costs associated with healthcare coverage are also projected to rise significantly with Medicare Part B premiums expected to reach $206.50 per month, an increase of 11.6% from the previous year. This could effectively diminish the 2.7% COLA’s impact, leaving retirees with potentially less disposable income.

With the Social Security trust fund projected to be depleted in seven years, many retirees remain concerned about the future of their benefits. Current political challenges make it difficult to predict the future of Social Security reform.