Social Security benefits are at the center of major changes in 2025. A rare cost-of-living adjustment (COLA) prediction and a full retirement age (FRA) increase are shaping the financial future of millions of Americans. Here’s what’s happening—and what it means for your benefits.
A 2026 COLA repeat? Why this hasn’t happened in 41 years
The Senior Citizens League (TSCL) projects a 2.5% COLA for 2026, identical to the adjustment issued for 2025. If this holds, it would mark the first time in 41 years that Social Security sees the same percentage increase two years in a row. The last instance was in 1983 and 1984, when benefits rose 3.5% each year.
While some may view a consistent COLA as a sign of stability, TSCL warns it could be misleading. Executive Director Shannon Benton noted that inflation experienced by seniors often exceeds official CPI-W reports, meaning many retirees feel a bigger financial squeeze despite moderate COLAs.
How COLAs are calculated
Social Security COLAs are based on third-quarter averages of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). TSCL updates its predictions monthly using CPI-W trends, Federal Reserve policy, and unemployment data. While early indicators point to a 2.5% increase in 2026, the official COLA won’t be finalized until October 2025.
What could change the projection?
- Rising summer inflation due to new tariffs and supply shocks
- Late-year market shifts that influence Q3 CPI-W values
- Continued Fed rate stability or shifts
Full retirement age hits 67—and it could go higher
The second major shift in 2025: the full retirement age has now officially increased to 67 for anyone born in 1960 or later. This is the final step in a phased-in increase legislated in 1983.
The impact is significant:
- Early retirees at 62 now lose up to 30% of their monthly benefit.
- Over a lifetime, that reduction can cost up to $420,000, according to Congressional Budget Office estimates.
- Those in physically demanding or lower-income jobs may be most affected, as working longer is not always feasible.
Could the FRA increase again?
Yes—and soon. Congress is actively debating proposals to raise the retirement age to 69 between 2026 and 2033. The Republican Study Committee is leading the push, and financial analysts say it’s a politically easier move than cutting current payouts or raising payroll taxes.
Aaron Cirksena, CEO of MDRN Capital, warns that such increases act as a “silent cut”—reducing benefits for future retirees without affecting current payments.
Why these changes are happening now
The Social Security trust fund is projected to be depleted by 2034. At that point, benefits would drop to 77% of current levels unless new funding is secured. Lawmakers are exploring several reforms:
- Raising the payroll tax cap for high earners
- Rewriting benefit formulas to favor lower-income retirees
- Gradually increasing the retirement age further
Each option has trade-offs, and none completely closes the funding gap.
What retirees and workers should do now
- Check your retirement age: If born in 1960 or later, plan around age 67—not 65.
- Model scenarios: Use SSA tools to calculate early, full, and delayed benefit amounts.
- Consider working longer: Especially if you’re in good health and earning income that boosts your lifetime benefit base.
- Speak to a retirement planner: For personalized strategies on when to claim benefits.
Key takeaways
- The 2026 COLA may match 2025’s 2.5%—a rare repeat not seen since 1984.
- The full retirement age is now 67 and may rise to 69, reducing total benefits for future retirees.
- Without reforms, Social Security may only pay 77% of benefits starting in 2034.
- Planning early and understanding the system is critical for securing your retirement.