Starting January 2026, Social Security will introduce some important updates that could impact both retirees and people still working. These changes include a bump in benefits to keep up with inflation, a higher full retirement age, and an increase in the amount of income subject to Social Security tax. Let’s break down what’s changing and what it means for you.
Benefits Will Increase with a New COLA
Every year, Social Security benefits are adjusted to match inflation. This increase is called the cost-of-living adjustment (COLA). For 2026, experts expect the COLA to be about 2.7%, a slight improvement over 2025’s 2.5%. That means the average monthly benefit for a retired worker could rise by roughly $54, bringing it to around $2,060. The exact number will be announced in October 2025 once the Social Security Administration reviews the latest inflation data. However, keep in mind that rising Medicare premiums could take away a portion of that increase. For many retirees, the boost might feel smaller than expected once healthcare costs are factored in.
Full Retirement Age Will Be 67
The biggest shift in 2026 is the official full retirement age increase. Starting that year, anyone born in 1960 or later will need to be 67 years old to claim full benefits. You can still start collecting benefits at 62, but doing so will mean as much as a 30% reduction in monthly checks. On the other hand, delaying until age 70 will still give you the maximum possible payment. This change marks the end of a gradual increase in retirement age that began decades ago. For those nearing retirement, it’s a reminder to carefully plan when to start benefits so you don’t lose out in the long run.
More Income Will Be Taxed
Another key change affects higher-earning workers. In 2026, the maximum amount of income subject to Social Security tax is expected to rise from $176,100 in 2025 to about $183,600. The tax rate itself isn’t changing it stays at 6.2% for employees. But because the cap is higher, those earning at or above the limit could end up paying nearly $11,383 in Social Security taxes, compared with $10,918 in 2025. This adjustment helps strengthen the program for future beneficiaries while keeping benefits linked to current earnings levels.
Other Updates to Watch
Along with these main changes, other thresholds are also expected to rise in 2026. Workers who are collecting benefits while still working may see higher income limits before their benefits are temporarily reduced. In addition, the amount of money needed to earn Social Security credits used to qualify for future benefits will also increase. While these adjustments are smaller, they can still affect how soon you qualify for benefits or how much you’ll take home if you’re working in retirement.
Planning Ahead for 2026 and Beyond
These changes highlight how Social Security continues to adapt to inflation and an aging population. For retirees, it means slightly higher checks but also bigger considerations about when to claim benefits. For workers, it could mean paying more in taxes if you’re a higher earner. The Social Security Administration will release final numbers in October 2025, so it’s worth keeping an eye on their official announcements. In the meantime, reviewing your retirement strategy and factoring in these updates can help you make the most of your benefits.