Social Security plays a critical role in retirement for many Americans, yet there are still widespread misconceptions about the program that could lead to poor financial choices. Here are three important updates for 2026 that may surprise retirees.
1. Higher Social Security Taxes for Some Workers
A common misconception is that Social Security taxes apply to all income, but that’s not the case. Only income up to a certain limit is subject to Social Security tax, and that limit increases each year to adjust for wage inflation.
For example, in 2025, the maximum taxable earnings limit will be $176,100, but it is expected to rise to $183,600 in 2026.
As a result, workers who earn above this threshold will pay more in Social Security taxes in 2026. For instance, someone making $200,000 will pay $465 more in Social Security taxes next year.
2. Full Retirement Age Will Increase
Many workers are unaware of their Full Retirement Age (FRA), which is the age at which you can begin receiving your full Social Security benefit. If you claim earlier, your benefits will be reduced; if you wait, your benefits will increase up to age 70.
In 2026, the FRA will continue to increase for people born in 1960 or later. For example, workers born in 1960 will reach FRA at 67 in 2027. The gradual increase in FRA started in 1983, when Congress raised it from 65 to 67, and it’s still having an impact on retirees today.
3. Social Security Benefits Will Get a COLA in 2026
Social Security benefits are adjusted annually for inflation through Cost-of-Living Adjustments (COLAs), and 2026 is no different.
According to the Social Security Board of Trustees, retired workers can expect a 2.7% COLA in 2026, which would increase the average monthly benefit from $2,007 in July 2025 to $2,061 in January 2026. That means retirees would receive an additional $54 per month or $648 for the full year.
COLAs are based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and the official COLA will be announced in mid-October based on the third-quarter CPI-W data.
Staying informed about Social Security changes is crucial for managing your retirement income.
While the program offers benefits that protect against inflation and provide a stable income source, understanding the adjustments in taxes, full retirement age, and cost-of-living adjustments can help retirees make more informed decisions for 2026 and beyond.
