2 Painful Social Security Changes to Brace for in 2026

Social Security is getting an update in 2026, with several key changes slated to take effect on Jan. 1. Some of these, like higher earnings test exempt amounts, are good news that will help seniors hold onto more of their benefits.

But there are two changes that could cost workers and retirees. Here's what you need to know so you can start preparing for them.

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1. More Social Security payroll taxes for high earners

The taxable wage base -- the amount of annual income subject to Social Security tax -- is set to increase from $176,100 in 2025 to $184,500 in 2026. This won't change anything for ordinary Americans, but high earners could owe Social Security payroll taxes on an extra $8,400 this year.

This tax is 6.2% for those who are employed by someone else, while self-employed workers pay double this amount. Those earning $184,500 or more could face additional taxes ranging from $521 to $1,042 next year due to this change.

Even if you don't fall into this group, you could still owe more in Social Security payroll taxes next year if you've recently gotten a raise. But since you're used to having money withheld from each paycheck to cover these taxes, you likely won't notice the change.

2. A disappointing cost-of-living adjustment (COLA)

Seniors will get a 2.8% cost-of-living adjustment (COLA) next month. This is technically a little above average compared to the last few decades, but it's far less than what most retirees were hoping for.

The Motley Fool's recent survey found that more than half of seniors said the 2.8% bump, which is slated to add approximately $56 to the average monthly benefit, will hardly improve their ability to afford essential living expenses. The vast majority wanted a COLA of 5% or more to help combat their benefits' loss of buying power due to inflation.

For many, the issue comes back to how the government calculates COLAs. It examines the difference in third-quarter inflation data, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which excludes retirees. Many have argued that the Social Security Administration should base its COLAs on the Consumer Price Index for the Elderly (CPI-E) instead. This would result in slightly larger COLAs in most years.

Some members of Congress have floated this idea, but so far, it hasn't gained traction. This doesn't mean this change will never happen. However, for now, seniors will need to find alternative ways to cover what Social Security doesn't.

Falling back on personal savings is a great option if you've got them. Or you could consider working at least part-time so you have a steady paycheck to supplement your benefits. You could also explore federal, state, and local government assistance programs to help you with key costs like groceries, healthcare, and utilities.

What to do now

The two changes discussed above won't take effect for another couple of weeks, but it's not too early to start planning your 2026 budget. If you're currently receiving benefits, you should've gotten a notice from the Social Security Administration explaining what your checks will look like with the COLA added. If you're on Medicare, the notice should also show how much the government will withhold to cover your Part B premiums next year.

Compare your take-home Social Security benefit to your monthly expenses. Figure out how much of your expenses you'll need to cover on your own and then explore different scenarios until you figure out a plan that works for you.

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