Wealth Insights
2026 Social Security: Changes on the horizon

Article 8 min read Published October 10, 2025

Cost-of-living adjustment (COLA) and full retirement age (FRA) among changes for the new year.

Speculative conversations around Social Security often focus on solvency, potential timelines for depletion, and what lies ahead for the ninety-year-old federally administered system of social security. Karen P. Glenn, Chief Actuary of the Social Security Administration recently noted that the recently enacted One Big Beautiful Bill Act (OBBBA) could slightly accelerate the depletion of Social Security funds.

Throughout its storied history, Social Security changes have expanded coverage, benefit types, and eligibility over time. From evolving in 1939 to include survivors and dependents to the 1956 addition of disability and then Medicare in 1965, the changes have varied from minor to significant. The 1970s and 1980s saw the latter in legislative changes including the introduction of automatic cost-of-living adjustments (COLAs) and reforms to address funding gaps, shifting the financing and benefit structure of Social Security which relies on employee and employer payroll taxes.

Social Security: Cost-of-living adjustments explained

The first COLA adjustment in 1975 clocked in at 8% and peaked in 1980 at 14.3%. In the four decades since, it bounced between 1.5% and 5.7% with a few years with zero adjustment in the 2000s. It jumped again to 8% in the 2022 post-Covid era. More recently, we’ve seen more steady rates between 2.4% and 3.2%. The Social Security Administration has announced 2026 COLA at 2.8%.

Social Security: Full retirement age ticks up

At its inception, the full retirement age (FRA) for Social Security was set at 65. This remained unchanged until 1983 when questions began to arise about its future. President Ronald Reagan signed the Social Security Amendments of 1983 in April that year, enacting a set of sweeping changes aimed at shoring up the program's shaky financial footing. According to AARP, this was drawn from recommendations of the National Commission on Social Security Reform (also known as the Greenspan Commission) and provisions included gradually raising FRA from 65 to 67.

Beginning in November 2025, FRA will continue its gradual climb to 66 years and 10 months for those born in 1959. And 2026 will mark the culmination of the amendments signed into law by President Reagan with the FRA increasing to 67 for those born in 1960 (or later).

Social Security: Maximum taxable earnings limit increase

When Social Security began, the maximum taxable earnings limit was set at $3,000. This remained unchanged until 1951 when the first increase took place. It continued sporadically until 1975 when the taxable maximum began to be automatically adjusted based on the national average wage index. This was the result of the limit not keeping up with rising inflation, creating a significant decline in the percentage of wages covered by the tax. The indexing adjustments ensured the limit grows with wages, though not perfectly to the rate of high-end wage growth.

The maximum taxable earnings limit will be $184,500 in 2026, according to the Social Security Administration. This reflects an increase of $8,400 from the 2025 ceiling of $176,100. Social Security withholdings cease once the maximum income amount for the year is reached. It is important to note there is no cap on Medicare taxes, and total wages are subject to the 1.45% tax.

“It Is important to note that there is also an additional Medicare tax of 0.9% for individuals earning over $200,000 per year, $250,000 for married couples filing jointly, or $125,000 for married tax filers filing separately,” says Jama DeHeer, CFP®, CDFA® and senior wealth planner at Regions.

Social Security: Retirement earnings test – collecting benefits in 2026

The Social Security retirement earnings test (RET) is enacted when an individual claims Social Security benefits before FRA and continues working and earning above a certain threshold. According to the Social Security Administration website, RET reduces Social Security benefits before you reach FRA and then increases benefits for the remainder of your life when you reach FRA. Benefits withheld while you continue to work are not lost; they are added to your monthly benefit once you reach FRA.

For beneficiaries younger than FRA throughout the year, the estimated annual earnings limit is $24,360. Under the RET, $1 in benefits will be withheld for every $2 earned above this limit. For beneficiaries reaching FRA in 2026, the estimated annual earnings limit is $64,800. In this case, $1 in benefits will be withheld for every $3 earned above this limit until the month the beneficiary reaches FRA.

Social Security: Earning credits in 2026

Earned through work and paying Social Security taxes, Social Security credits, also known as quarters of coverage, have a maximum of four credits per year. The amount of earnings required for one credit determines how many credits you accumulate towards eligibility for benefits and changes annually.

In 2025, that amount is $1,810 for one credit with earnings of $7,240 to earn the four-credit maximum. That amount will increase to $1,890 in 2026.

Social Security: Insolvency may be closer than you think

The Social Security Board of Trustees released its annual report on the financial status of the Social Security Trust Funds and the outlook isn’t rosy. The combined reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to have enough dedicated revenue to pay all scheduled benefits and associated administrative costs until 2034, one year earlier than projected in 2024.

The OASI Trust Fund solvency projection remains through 2033 and will have to reduce benefits by 23% by 2035.

With the clock ticking on the government-sponsored social insurance program, the lingering question is what will remain of the program as it approaches its milestone century anniversary.