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Each year, retirees depend on Social Security to help them cover their essential costs in retirement. Social Security is a lifeline for seniors who benefit from a guaranteed source of income that is protected against the effects of inflation due to periodic benefit increases. However, while Social Security is crucial to helping keep many retirees out of poverty and to allow others to enjoy a comfortable retirement, it is also a complicated program with many complex rules that far too many seniors don’t understand.
One of the challenges facing current and future retirees is that the rules for Social Security change over time. Many of these changes are built into the program, so they happen automatically. They also affect the finances of current retirees and of current workers who will depend on these benefits later in life.
Everyone needs to understand how these key changes can impact their money, so here are three of them that everyone should know about for 2026.
1. Monthly benefit amounts are changing
One of the first big changes that will have a huge impact on seniors is the change to monthly Social Security benefits.
Benefits don’t stay the same every year, and they can’t, or they would lose buying power due to inflation. There’s a Cost of Living Adjustment (COLA) made in most years that increases benefits based on how much prices have gone up, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The COLA has already been announced for the upcoming 2026 year, and retirees are in line to get a 2.8% raise. Anyone collecting Social Security benefits will get this income bump, which should provide a little bit of financial relief, as the raise is slightly larger than the amount they got in 2025. However, it is worth noting that there are concerns that COLAs don’t accurately measure the inflation experienced by retirees because the CPI-W index isn’t a perfect match to their spending.
So, seniors still need to make sure they are following a budget and not withdrawing too much from retirement plans to maintain their standard of living if the COLA doesn’t go as far as they’d hoped.
2. Full retirement age is changing
The next big change that retirees will experience is a change in the Full Retirement Age (FRA). FRA is the age when the standard Social Security benefit amount, or primary insurance amount (PIA), is available. PIA is calculated based on a percentage of average wages and is then adjusted based on whether the claimer has started benefits early, late, or at full retirement age.
For anyone who turned 66 in 2025, full retirement age was 66 years and 10 months. FRA is moving later, though, and anyone born in 1960 or later will have a full retirement age of 67.
This means that future retirees who are waiting to claim benefits will need to wait a few extra months to hit their FRA and start their payment without losing some of their benefit. It’s also worth noting that waiting beyond FRA opens up the door to earning delayed retirement credits, and it may be worth it for those who don’t truly need their funds to get by right away.
3. Taxes on Social Security are changing
Finally, the last thing to know is that taxes on Social Security are changing for current workers. Specifically, the maximum amount of income subject to Social Security tax is going up.
While most people already pay Social Security tax on all of the income they earn, higher earners don’t necessarily do that. There is a cap on taxable earnings, which is called the wage base limit. In 2025, the wage base limit was $176,100, so anyone who earned above that amount paid Social Security taxes on the full $176,100 but then did not have to pay any additional Social Security tax on their income above that threshold.
For 2026, the limit is going up to $184,500. This means that some workers will be taxed on thousands of dollars in additional income. The good news is that extra income will be factored in when their Social Security benefits are calculated. But it still means paying more taxes next year than in 2025.
These are changes to Social Security that will affect current and future workers. If they impact your finances and you aren’t sure how best to manage your benefits, you should consider consulting with an experienced financial advisor to offer you advice on these important issues.