Social Security is raising its full retirement age, adjusting how much you can earn before benefits are reduced, and changing the cost-of-living increase formula

Starting in 2026, Social Security will shift three major rules that affect when you can claim, how much you can earn while working, and how your benefits grow each year. The full retirement age — the age at which you receive 100 percent of your benefit — moves up by two months for people born in 1960. The earnings limit, which reduces benefits if you work before full retirement age, increases to a new threshold. And the cost-of-living adjustment (COLA), which raises all benefits annually, will be calculated using a different method that may produce smaller increases than in recent years.

These changes do not happen all at once, and they affect different groups of people at different times. Understanding what changes in 2026 and what it means for your specific situation requires knowing your birth year, your current work status, and when you plan to claim.

Key Takeaways

  • Full retirement age increases by two months in 2026 for people born in 1960, meaning you must wait longer to receive your full benefit amount without reduction.
  • The annual earnings limit for people under full retirement age will increase in 2026, but the exact dollar amount depends on Social Security's annual announcement, typically made in October.
  • The 2026 cost-of-living adjustment will be calculated using a chained Consumer Price Index method starting in 2026, which typically produces smaller annual increases than the current method.
  • If you were born in 1960 and plan to claim at 67, you will need to wait until age 67 and 2 months in 2026 to receive your full benefit without reduction.
  • Early claiming at 62 remains available in 2026, but your monthly benefit will be reduced by a larger percentage because your full retirement age is higher.

Full Retirement Age Moves Up Two Months for People Born in 1960

Social Security has been gradually raising the full retirement age since 2000. In 2026, that age increases by two months for anyone born in 1960. If you were born in 1960, your full retirement age becomes 67 years and 2 months, rather than 67 years. This means you cannot receive your unreduced benefit until you reach that exact age.

This change affects only people born in 1960. People born in 1959 or earlier already have a full retirement age of 67 or lower. People born in 1961 will see their full retirement age increase by four months in 2027. The gradual two-month-per-year increase continues through 2022 for people born between 1943 and 1954, and then pauses. Anyone born in 1955 or later will eventually have a full retirement age of 67 and some number of months.

If you claim before your full retirement age, your benefit is permanently reduced. The reduction grows larger as your full retirement age increases. For someone born in 1960 who claims at 62, the reduction will be about 30 percent of the full benefit, compared to about 30 percent for someone born in 1959 with a full retirement age of 67. The exact reduction percentage depends on how many months early you claim.

Earnings Limit Increases, but the 2026 Amount Is Not Yet Public

If you work and claim Social Security before reaching your full retirement age, Social Security reduces your benefit by $1 for every $2 you earn above a certain threshold. This threshold, called the earnings limit, increases each year based on wage growth. In 2025, the earnings limit is $23,400. The 2026 limit will be higher, but Social Security does not announce the exact figure until October of the previous year.

The earnings limit applies only to the year you claim and the years before you reach full retirement age. Once you reach full retirement age, you can earn any amount without any reduction to your benefit, regardless of how much you earned in previous years. The reduction also stops in the month you reach full retirement age, even if you have not yet received a full year of benefits at that age.

If you are self-employed, the earnings limit applies to your net profit from self-employment, not your gross revenue. If you own a business but do not actively work in it, those earnings may not count toward the limit. Social Security uses specific rules to determine what counts as work in your own business, so if you are self-employed and considering claiming before full retirement age, you should contact Social Security directly to understand how your situation is treated.

Cost-of-Living Adjustment Changes to a Chained Formula in 2026

Every year, Social Security raises all benefits by a cost-of-living adjustment, or COLA. This increase is meant to keep benefits in line with inflation. Since 1975, COLA has been based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Starting in 2026, Social Security will switch to a chained Consumer Price Index, or C-CPI-U, to calculate the annual increase.

The chained index typically produces smaller annual increases than the current method. The difference is usually less than 0.5 percentage points per year, but over time it compounds. For example, if the current method would produce a 2.5 percent increase and the chained method produces a 2.0 percent increase, the gap grows larger each year. A person receiving $2,000 per month would see a difference of about $10 per month in the first year, but that gap widens in subsequent years.

This change affects all beneficiaries — retirees, disabled workers, and survivors. The 2026 COLA will be announced in October 2025 using the new chained formula. Social Security has not yet published what the 2026 increase will be, because it depends on inflation data from the months leading up to the announcement.

How These Changes Interact If You Plan to Claim in 2026

If you were born in 1960 and are considering claiming in 2026, all three changes affect your decision. Your full retirement age is now 67 and 2 months, so claiming at 62 results in a larger permanent reduction than it would have for someone born in 1959. If you work in 2026, the earnings limit is higher than 2025, but you still cannot earn above that limit without a benefit reduction. And your benefit amount, whatever you claim, will grow by the 2026 COLA calculated using the new chained formula.

The interaction matters most if you are deciding between claiming early and waiting. Waiting until your full retirement age of 67 and 2 months means you avoid the earnings limit entirely and receive your full unreduced benefit. Claiming at 62 means you receive a check sooner, but the reduction is permanent and larger than it would have been under the old full retirement age. The break-even point — the age at which waiting becomes financially better — depends on your health, family history, and how long you expect to live.

Delayed Retirement Credits Still Increase Your Benefit After Full Retirement Age

If you wait to claim after your full retirement age, your benefit increases by 8 percent per year until age 70. This increase, called a delayed retirement credit, is not affected by the 2026 changes. Someone born in 1960 who waits until age 70 to claim will receive about 124 percent of their full retirement age benefit (67 and 2 months), compared to about 124 percent for someone born in 1959 with a full retirement age of 67.

The delayed retirement credit is one of the few ways to increase your Social Security benefit after you become may be able to access. It applies whether you are still working or not, and it continues to accrue each month you delay. If you are in good health and expect to live into your mid-80s or beyond, delaying can result in a larger total benefit over your lifetime.

Spousal and Survivor Benefits Also Shift with Full Retirement Age

If you are may be able to access for a benefit based on your spouse's work record, your full retirement age also increases in 2026 if you were born in 1960. Spousal benefits are reduced if you claim before your full retirement age, and the reduction is larger when your full retirement age is higher. Survivor benefits — benefits paid to your family if you die — are also affected by your full retirement age, because some survivor benefits are based on the age at which you would have been may be able to access for your own full benefit.

The rules for spousal and survivor benefits are complex and vary depending on your birth year and your spouse's birth year. If you are considering claiming a spousal or survivor benefit in 2026, you should contact Social Security to understand how the full retirement age change affects your specific situation.

Frequently Asked Questions

Do I have to wait until 67 and 2 months if I was born in 1960?

No. You can claim at 62 if you choose, but your benefit will be permanently reduced by about 30 percent. You can also claim at any age between 62 and 70. The later you claim, the larger your monthly benefit. Full retirement age is the age at which you receive your full unreduced benefit, but it is not the only age at which you can claim.

Will the earnings limit affect me if I claim at my full retirement age?

No. The earnings limit applies only to people who claim before their full retirement age. Once you reach 67 and 2 months in 2026 (if you were born in 1960), you can earn any amount without any reduction to your benefit. The limit stops explore in the month you reach full retirement age.

How much smaller will the 2026 cost-of-living increase be?

Social Security has not yet announced the 2026 COLA. The chained formula typically produces increases that are 0.1 to 0.5 percentage points lower than the current method, but the difference varies year to year depending on inflation patterns. The exact 2026 figure will be announced in October 2025.

If I claimed before 2026, do these changes affect my current benefit?

The full retirement age change does not affect people who already claimed. Your benefit amount and reduction are locked in based on the rules in effect when you claimed. You will still receive the 2026 cost-of-living adjustment like all other beneficiaries, calculated using the new chained formula.

What if I was born in 1961 or later?

Your full retirement age will increase further in future years. People born in 1961 will see their full retirement age increase by four months in 2027. The gradual increase continues, with your full retirement age eventually reaching 67 and some number of months depending on your birth year.