You Have Less Than 3 Months To Prepare for 3 Big Social Security Changes

Major changes to Social Security are set to take effect in early 2026, and both retirees and current workers need to be ready. These updates affect when you can claim full benefits, how much your monthly checks will increase due to inflation, and how much of your income is taxed.

Understanding these shifts now can help you make smarter financial decisions and avoid costly surprises later on. Learn what's changing, why it matters, and how to prepare yourself financially before the new rules take effect.

Full retirement age rises to 67

In 2026, the full retirement age (FRA) for Social Security will be pushed to 67. This will affect those born in 1960 or later, completing the gradual rise that began with the 1983 reforms. The age has moved from 65 to 66 and beyond. If you turn 66 in 2026, you must wait an extra year for full benefits. 

While the increase may seem small, the financial impact is notable. Full retirement age sets your monthly benefit, and claiming early will cause permanent reductions. Starting benefits at 62, now five years early, will mean about a 30% cut compared to waiting until 67. Reductions are based on how many months before full retirement you claim, so a higher FRA increases the early penalty.

Delaying benefits past 67 still raises monthly payments through delayed retirement credits, up to age 70. That incentive remains, offering an 8% increase each year you wait. For many, the change makes claiming age more important. Retiring at 66 in 2026 will be one year early, not full. Those planning to retire in their mid-sixties may need to adjust their timelines or supplement their income with other sources.

Social Security's retirement calculator highlights how timing affects benefits. The higher full retirement age moves the goalposts, so near-retirees should recalculate. With rising longevity and health care costs, early claiming can significantly reduce lifetime income. Planning for this change now is critical to avoid surprises.

Cost‑of‑living adjustment

Another big change for 2026 is the annual cost‑of‑living adjustment (COLA). Early estimates suggest a 2.7% to 2.8% benefit increase starting in January. This is based on inflation data and the Consumer Price Index (CPI-W), which sets COLAs. The official number will be finalized on October 24, after the third-quarter inflation data is released.

While any increase is welcome, the COLA often fails to keep pace with real-life inflation, especially as Medicare premiums, which are deducted from Social Security checks, frequently rise as well. These cost increases can sometimes absorb the full COLA, leaving net benefits flat, and could repeat in 2026.

Fixed-income retirees may struggle, as COLA increases often lag rising medical, drug, and utility costs. The 2026 COLA is higher than earlier forecasts due to recent inflation, but it may not maintain seniors' purchasing power. Future changes to COLA calculations could result in even smaller increases.

For those relying on Social Security, monitor the COLA and Medicare premium changes to understand your true net benefit. Consider how these figures will affect your monthly budget if you're retired or planning to claim soon.

Wage base limit increase

The third change coming in 2026 affects workers, especially those with higher incomes. The Social Security wage base rises from $176,100 in 2025 to about $183,600 in 2026. Income above this will not be taxed for Social Security, but will still be subject to Medicare tax.

For high earners, this change means a larger share of income will be taxed, increasing the total amount paid into the system. While this also slightly boosts future benefit calculations by including more earnings in the formula, the immediate effect is a higher tax bill for both employees and employers alike. A worker earning above the current cap will see hundreds of dollars in additional payroll tax withholding next year.

This adjustment is automatic, reflecting national wage growth as average wages rise. The substantial jump from 2025 to 2026 represents Social Security's ongoing adaptation to economic trends, potentially affecting take-home pay just as some ramp up retirement savings.

Review your pay stub, update withholding estimates, and reconsider your retirement savings to offset the higher tax. If you're self-employed, remember you pay both employee and employer shares of Social Security tax, increasing the impact.

Bottom line

Expect smaller benefits if you claim early due to a higher full retirement age, only modest increases from COLA, and more Social Security tax owed due to a higher wage cap. All together, these changes mean that it's more important than ever to plan for higher medical costs, stricter budgets, and increased taxes.

For those approaching retirement, reevaluate your claiming strategy, recalculate projected benefits under the updated rules, and adjust your savings as needed. For those still working, especially at higher income levels, account for increased payroll taxes in next year's budget.

Final COLA and Medicare premium numbers are announced on October 24, so be sure to keep an eye out for those updates. Begin preparing now by understanding changes and making informed decisions about claiming benefits, savings, and budgeting to secure your retirement plan.