The Social Security Administration (SSA) announced a 2.8% raise in the Cost of Living Adjustment (COLA) for 2026 benefits, an index that exists to phase out the impact of the inflation in the United States, and it’s subsequent increment over the cost-of-living.
This adjustment, calculated based on the Consumer Price Index (CPI-W), will be applied to the payments of approximately 75 million Americans who receive Social Security retirement, survivor, or disability (OASDI) and Supplemental Security Income (SSI) benefits.
Social Security beneficiaries will see the increase reflected starting in January 2026, while SSI recipients will see it reflected starting December 31, 2025.
The COLA 2026 Will Be 2.8% for Fveryone
The increase will raise the average monthly benefit for all retired workers from $2,015 to $2,071. For a retired couple receiving benefits, the average will rise from $3,120 to $3,208 per month. The SSA estimates that, on average, retirement benefits will increase by approximately $56 per month.
The announcement of the COLA for 2026 follows a 2.5% COLA applied in 2025. According to SSA data, the average increase in the COLA over the past decade has been approximately 3.1%. The Social Security Act establishes the formula for calculating this adjustment, directly linking it to inflation as measured by the CPI-W.
New Maximum Benefits Based on Retirement Age
Along with the COLA, other automatic changes take effect each January, based on increases in national average wages. The most significant change in this area is the increase in the maximum income subject to Social Security tax, known as the income threshold. By 2026, this threshold will rise to $184,500, an increase from the $176,100 in effect in 2025.
Maximum Social Security benefits, received by workers who contributed the maximum taxable amount for at least 35 years, will also increase. The maximum amount for a worker retiring at full retirement age will reach $4,152 per month in 2026, up from $4,018 in 2025.
For those who choose early retirement at the minimum age of 62, the maximum monthly benefit will be set at $2,969. This figure represents a permanent reduction compared to the full retirement amount, a consequence of claiming benefits early.
Au contraire, workers who postpone retirement until age 70, the maximum age for accruing late payment credits, will be eligible for a maximum benefit of $5,251 per month in 2026.
The age at which a person claims benefits is the most important determining factor in the final amount. Claiming at age 62 reduces the monthly benefit by approximately 30% compared to waiting until full retirement age. On the other hand, delaying the claim beyond this age results in a benefit increase of two-thirds of 1% for each month of delay, which can amount to an increase of approximately 24% for someone who waits until age 70.
The Full Retirement Age Is Set to Change
A significant structural change will take effect in 2026. The full retirement age (FRA) will reach 67 for all individuals born in 1960 or later. This increase is the final step in a 1983 legislative reform designed to strengthen the program’s finances.
This change means that younger Americans, including baby boomers born between 1960 and 1964 and members of Generation X, will not be able to receive 100% of their calculated benefits until they turn 67. For someone born in 1960, this means their full retirement age will be in 2027, not 2026. The FRA had been increasing by two months per year since 2021.
Adjustments to Income Limits and Other Parameters
Along with the COLA, the SSA adjusts other key limits that affect beneficiaries annually. The means-test income limits will increase by 2026. For beneficiaries under FRA for the entire year, the annual limit will rise to $24,480 (or $2,040 per month). For every $2 earned above this limit, $1 will be withheld from benefits.
For individuals reaching full retirement age in 2026, the income limit will be higher: $65,160 annually (or $5,430 monthly). In this case, $1 in benefits will be withheld for every $3 of income exceeding the limit, and this only applies to the months prior to reaching full retirement age. Once full retirement age is reached, there is no limit on earned income.
The amount needed to qualify for a the Earnings Before Interest and Taxes (EBIT) tax credit will also increase. In 2026, workers will need an income of $1,890 to qualify for one credit, with a maximum of four credits per year. Therefore, $7,560 in taxable income is required to qualify for all four annual credits.
