3 Big Social Security Changes Coming in 2026 Might Surprise Retirees

Social Security benefits are an important source of income for millions of retired workers. Yet, many Americans misunderstand basic aspects of the program, and knowledge gaps can lead to costly financial mistakes.

For instance, Social Security undergoes certain changes each year to keep benefits aligned with inflation and wages, but recent surveys from T. Rowe Price and Nationwide Retirement Institute suggest three changes slated for 2026 will surprise many retirees.

Here are the important details.

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1. Social Security benefits will be adjusted to account for inflation in 2026

Investment manager T. Rowe Price reports that 19% of retired workers incorrectly marked this statement as true: "Social Security retirement benefits do not adjust with inflation." And one-third of surveyed adults nearing retirement (ages 50 to 61) also answered the question incorrectly.

Social Security benefits receive annual cost-of-living adjustments (COLAs) to ensure their purchasing power keeps pace with inflation. COLAs are calculated based on how a subset of the Consumer Price Index known as the CPI-W changes in the third quarter of each year, meaning the three-month period between July and September.

CPI-W inflation measured 2.8% in the third quarter of 2025, so Social Security benefits will increase 2.8% in 2026. That is slightly larger than the 2.5% increase retirees received this year. The chart below explains how the 2.8% COLA will change the average monthly benefit paid to different types of beneficiaries next year.

Data source: The Social Security Administration. The average benefit before the 2.8% COLA reflects the average payments made in August 2025.

Importantly, the Social Security Administration will mail COLA notices in December. Those single-page forms will explain your updated benefit amount and any deductions. Those COLA notices will also be available online in late November through the my Social Security portal online.

2. The maximum Social Security benefit will increase in 2026

Nationwide Retirement Institute reports that 39% of surveyed adults incorrectly marked the following statement as false: "There is a cap to how much Social Security benefits you can get." In fact, benefit payments are capped simply because the amount of income subject to Social Security's payroll tax is capped.

To elaborate, Social Security benefits are calculated as a percentage of average inflation-adjusted monthly earnings. But the benefits formula only considers income subject to the payroll tax. For instance, the maximum taxable earnings limit is $176,100 in 2025. The benefits formula does not consider income above that level, which naturally puts an upper limit on payments.

Social Security benefits also depend on claim age. Retirees that start Social Security at 62 (i.e., the earliest possible age) get the smallest possible benefit based on their lifetime income, and retirees that start Social Security at 70 get the largest possible benefit based on their lifetime income.

The chart below shows the maximum monthly Social Security benefit at different claim ages in 2026:

Data source: The Social Security Administration.

3. Retirees that claim Social Security early will be able to earn more income before benefits are withheld in 2026

Nationwide Retirement Institute reports that 38% of surveyed adults 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)." Workers that start Social Security before FRA will have some benefits temporarily withheld if their income exceeds the retirement earnings test (RET) amounts.

There are two RET limits: The lower limit applies to persons who will not reach FRA during the current year, and the upper limit applies to persons who will reach FRA during the current year. In 2026, the lower RET limit increases to $24,480 and the upper RET limit increases to $65,160. Here's what that means:

• The lower limit: Social Security beneficiaries not reaching FRA during 2026 will have $1 in benefits withheld for every $2 in income that exceeds $24,480.
• The upper limit: Social Security beneficiaries reaching FRA during 2026 will have $1 in benefits withheld for every $3 in income that exceeds $65,160.

Importantly, the RET limits no longer apply once a beneficiary reaches FRA. Additionally, any income withheld prior to that point is gradually repaid, such that RET-affected beneficiaries recoup most or all of the benefits withheld over the course of a typical lifespan.

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