What All Retirees Need to Know About Social Security in 2026

Millions of retired Americans today get benefits from Social Security. And once you retire, those monthly paychecks could become a financial lifeline for you as well.

Whether you're retired or not, it's important to know that Social Security could be in for a big change in less than a decade. And it's not a positive one.

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Social Security is facing financial challenges

The good news is that Social Security is not in danger of having to cut benefits in 2026. The program still has enough revenue to keep up with payments in the near term.

But it's also important to recognize that Social Security is facing a major funding shortfall in the coming years due to an anticipated mass exodus of baby boomers from the workforce. Once that happens, Social Security will struggle to keep up with its financial obligations.

According to the program's most recent Trustees Report, Social Security's Old-Age and Survivors Insurance (OASI) Trust Fund will only be able to pay 100% of planned benefits through 2033. At that time, the OASI Trust Fund is expected to run dry, resulting in a potential 23% broad benefit cut.

Social Security also has a Disability Trust Fund used to pay benefits to disabled workers. If lawmakers were to vote to combine the program's two trust funds, they'd be able to pay benefits in full through 2034. From there, recipients could be looking at a 19% benefit cut. That's better than a 23% reduction but clearly far from ideal.

Unwanted changes could be coming

Lawmakers are unlikely to sit back and allow Social Security to cut benefits without trying to prevent that from happening. Unfortunately, the solutions available to stave off benefit cuts all seem to have negative consequences.

Lawmakers could vote to increase the Social Security payroll tax rate, which currently sits at 12.4%. But if that happens, both workers and employers will face higher taxes on wages. That could burden employees and force employers to make cuts.

Lawmakers could also vote to raise or totally eliminate the Social Security cap for taxed wages, which currently sits at $184,500. But if workers are forced to pay taxes on more earnings, Social Security might have to raise its maximum monthly benefit to keep things equitable. Whether that results in much of a net gain for the program is questionable.

Finally, lawmakers could move to increase full retirement age, which is when older Americans get to collect their Social Security checks without a reduction. Full retirement age is currently 67 for anyone born in 1960 or later. Increasing it by a year or two could force more people to work longer than they'd like to.

Prepare now in case things change for the worse

At this point, potential Social Security cuts aren't so far off. And while they're certainly not guaranteed to happen, it's best to plan for them.

For current workers, that means boosting savings. For retirees, it means looking at different ways to generate income, like working, and cutting expenses when possible.

It's also important to brace for other changes that might arrive, such as higher taxes or a new full retirement age that could be phased in for younger workers. While it's too soon to know what steps lawmakers will take to save Social Security from benefit cuts, it's best to plan for every scenario on the table.

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