© zimmytws / Shutterstock.com
The new year is approaching fast, and while you may be focused on the busy holiday season, it’s never too early to start thinking about what your finances will look like in 2026.
Whether you are a current retiree or are still working, getting a clear idea of your financial picture involves knowing about a few key changes to Social Security that are happening in the New Year. In particular, there are four big changes that are coming your way that you need to be ready for. Here’s what they are.
1. Social Security benefits are increasing
The first big Social Security change that is coming in 2026 is one that retirees are going to be excited about. Seniors are getting a Cost of Living Adjustment (COLA) in 2026. As a result, benefits are expected to increase by 2.8%. While some of this will be offset by an increase in Medicare premiums, this raise is still larger than the 2.5% increase that retirees got in 2025.
The COLA is intended to help retirees keep pace with rising costs. While it may not do that perfectly due to the formula that is used to calculate it, retirees will still be grateful for the extra money in their bank accounts beginning in January as they cope with price increases at the grocery store and on other everyday items.
2. Full retirement age for claiming benefits is changing
The second big change to Social Security will affect anyone who has not yet reached full retirement age. Full retirement age is the time when you can collect your standard benefit, and it is moving later next year. Starting in 2026, everyone who is turning 66 or who will turn 66 in the future will have a full retirement age of 67. This is up from 66 and 10 months, which is the full retirement age for people who turned 66 this year in 2025.
FRA is based on birth year, and it has gradually been moving later because of reform legislation that was passed in the 1980s to stabilize Social Security’s finances. If you claim benefits before full retirement age, you will lose some of your monthly income due to early filing penalties. Benefits could shrink by up to 30% if your FRA is 67 but you start getting payments at 62. Those who wait beyond FRA, on the other hand, see an increase in monthly benefits thanks to delayed retirement credits.
You need to know about the change to FRA happening next year, because it means you need to wait a little bit longer to start your first payment if you don’t want reduced checks during your retirement years.
3. You can work more and still get benefits
The next thing to be aware of is that the rules for how much you can work are changing. If you work while you collect Social Security and you have already reached full retirement age, then you don’t have to worry about losing any benefits, no matter how much you earn. If you have not reached full retirement age, though, there is an earning limit, and you begin to forfeit benefits if you go above it.
The earning limit is going up to $24,480 per year in 2026 for those who won’t reach FRA at all next year. It was $23,400 in 2025. Once you go above this limit, you’ll lose $1 in benefits for every $2 you make above that threshold. If you will reach FRA at some time during the year, you have a higher earning limit. It’s $65,160, up from $62,160 in 2025. Once you go above that amount, benefits are reduced by $1 for every extra $3. You eventually get credit for missed benefits when you hit full retirement age and your Social Security payment is recalculated, but many retirees are still upset to find they can’t double-dip and work while getting full benefits.
The change to the work limits is good news for those who want to earn a little extra income in the upcoming year without affecting the size of their Social Security checks.
4. Current workers will pay more tax on their Social Security benefits
Finally, the next thing to know is that current workers who are paying Social Security tax are going to have to pay more of it. The wage base limit is going up to $184,500 from $176,100. The wage base limit is the maximum amount of income you earn that is subject to Social Security taxes. Once you exceed that limit, you are no longer required to pay Social Security tax on your added income, and the extra you earn won’t be counted in the formula used to determine Social Security benefits. A higher limit in 2026 means workers pay more now, but they will get a larger benefit later because of it.
These are important changes that can have a major impact on your finances. If you need to know more details about how changes to Social Security rules could affect you, you should consider talking with a financial advisor to get advice about the Social Security rules.