AARP sends strong message on major 2026 Social Security change | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

In my 30-plus years of experience publishing news and analysis about finances and economic policy, I’ve seen a number of changes to federal retirement programs that affect people’s lives.

Each year, it’s important to understand any new program modifications. These include changes to Social Security and Medicare, as well as 401(k) plans and Individual Retirement Accounts (IRAs).

As we approach the final week of February, let’s focus on changes to Social Security benefits that people are now seeing and that are impacting their retirement plans.

In 2026, one key update is that the cost-of-living adjustment (COLA) increases monthly paychecks by 2.8%.

“The 2.8 percent cost-of-living adjustment (COLA) will begin with benefits payable to nearly 71 million Social Security beneficiaries in January 2026,” wrote the Social Security Administration before the end of 2025.

“Increased payments to nearly 7.5 million SSI recipients will begin on December 31, 2025.” (Note: Some people receive both Social Security and SSI benefits.)

Higher Medicare Part B premiums may offset the 2026 COLA Social Security increase.

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AARP explains Social Security changes in 2026

The adjustments to Social Security in 2026 have a direct impact on what people receive in retirement.

First, the COLA increase “means about $56 more per month for the average retiree — but higher Medicare Part B premiums may offset part of the increase,” explained AARP, the nonprofit advocacy group for Americans more than 50 years old.

“For older adults who claim Social Security before reaching full retirement age but continue to work, the retirement earnings limit is increasing, allowing them to earn more before any benefits are temporarily withheld,” AARP continued.

Also in 2026, the ceiling on earnings subject to Social Security taxes rises to $184,500, increasing the revenue that supports the program’s long‑term stability.

“Understanding these Social Security updates empowers you to plan your finances confidently, maximize your retirement benefits and secure a more stable future,” wrote AARP.

AARP outlines Social Security modifications in 2026

Here is an outline of major Social Security modifications, with more detail, according to AARP.

The Social Security Cost-of-Living Adjustment (COLA) in 2026

The annual COLA is designed to help retirement income keep pace with inflation.
Benefits rise by 2.8% in 2026, which amounts to roughly $56 more per month, or about $672 annually, for the average retired worker.
Part of this increase may be offset by higher Medicare Part B premiums, which are automatically deducted for most individuals over age 65.
The standard Part B premium increased by about $21 per month, reducing the net monthly benefit increase by that amount. Source: AARP

Retirement earnings test for 2026 Social Security

The retirement earnings test determines how much in benefits is temporarily withheld for individuals who claim Social Security before reaching full retirement age while continuing to work.
Social Security withholds $1 in benefits for every $2 earned above the annual limit.
In 2026, that earnings limit rises by $1,080 to approximately $24,480.
Any withheld benefits are later returned through higher monthly payments once full retirement age is reached.
After full retirement age, the earnings test no longer applies, and no deductions are made. Source: AARP

Maximum taxable earnings for Social Security rises in 2026

The maximum amount of annual earnings subject to Social Security payroll taxes increases in 2026.
This taxable maximum rises by $8,400, reaching $184,500.
After an individual earns that amount in a given year, no additional Social Security taxes are owed for the remainder of the year.
The higher cap brings additional revenue into the system, supporting the program’s long-term financial stability. Source: AARP

Overall impact

Retirees receiving Social Security will see a modest increase in monthly benefits.
Individuals who work while collecting benefits before full retirement age will be able to earn more before any benefits are withheld.
Higher-income workers will contribute Social Security taxes on a larger share of their earnings.
These adjustments help the program keep pace with economic conditions and remain sustainable for future beneficiaries. Source: AARP

SSA commissioner comments on Social Security COLA

“The Social Security Act provides for how the COLA is calculated,” the SSA explained.

“The Social Security Act ties the annual COLA to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as determined by the Department of Labor’s Bureau of Labor Statistics.”

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Frank J. Bisignano, Social Security Administration commissioner released a statement on the cost-of-living adjustment.

“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security,” Bisignano said, according to the SSA.

“The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”