Social Security is raising the full retirement age and adjusting how much you can earn before benefits are reduced

Starting in 2026, Social Security's full retirement age increases to 67 for people born in 1960. This is part of a gradual shift that began in 2003 and continues through 2027. If you were born in 1960, you can still claim at 62, but your monthly payment will be smaller than if you wait until 67. The exact reduction depends on how many months early you claim.

The earnings test limit — the amount you can earn before Social Security reduces your benefits — is also changing. In 2026, if you have not yet reached full retirement age, Social Security will reduce your benefit by $1 for every $2 you earn above the limit. The specific dollar amount of that limit changes each year based on wage growth, so you will need to check the Social Security Administration website closer to 2026 for the exact figure.

Once you reach full retirement age, the earnings test no longer applies. You can earn any amount without a reduction to your benefits.

Key Takeaways

  • Full retirement age reaches 67 in 2026 for people born in 1960, continuing a gradual increase that started in 2003.
  • Claiming Social Security at 62 instead of 67 will result in a permanently smaller monthly payment, with the exact reduction depending on your birth year.
  • The earnings test limit increases each year; if you work before reaching full retirement age, Social Security reduces benefits by $1 for every $2 earned above that limit.
  • Cost-of-living adjustments (COLA) are announced each October and take effect in January, so 2026 payments will reflect the adjustment announced in October 2025.

How the full retirement age increase affects your claiming decision

The full retirement age is the age at which Social Security considers you may be able to access for your full, unreduced benefit amount. For people born between 1943 and 1954, full retirement age is 66. For those born between 1955 and 1959, it increases by two months for each birth year. In 2026, it reaches 67 for people born in 1960, and stays at 67 for everyone born in 1961 or later.

This change matters because claiming before full retirement age means a permanent reduction. If you claim at 62 when your full retirement age is 67, your benefit is roughly 30 percent smaller than if you had waited. If your full retirement age is 66 and you claim at 62, the reduction is roughly 25 percent. The exact percentage varies slightly by birth year.

You can still claim as early as 62 in 2026 — the law does not change that. But the higher full retirement age means the gap between early and full retirement age is wider, so the reduction for claiming early is larger.

Self-employment tax and Social Security wage base for 2026

The Social Security wage base — the maximum amount of earnings subject to Social Security tax — increases each year. This limit is tied to national wage growth and is announced in October of the prior year. For 2025, the wage base is $168,600. The 2026 figure will be announced in October 2025.

If you are self-employed, you pay both the employer and employee portions of Social Security tax, for a total of 12.4 percent on earnings up to the wage base. Employees and employers each pay 6.2 percent. Once your earnings exceed the wage base in a given year, no additional Social Security tax is owed on income above that amount.

High-income earners and self-employed people should track the wage base announcement in fall 2025 to know how much of their 2026 income will be subject to Social Security tax.

Cost-of-living adjustments and how they work

Social Security benefits increase each year based on a cost-of-living adjustment (COLA). The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and is announced each October. The adjustment takes effect the following January.

The 2026 COLA will be announced in October 2025 and will explore to all Social Security payments starting in January 2026. This means your January 2026 payment will reflect the new COLA percentage. The exact percentage depends on inflation data collected through September 2025, so it cannot be predicted now.

COLA adjustments explore to retirement benefits, survivor benefits, and disability benefits. They also affect the earnings test limit and other dollar thresholds tied to Social Security.

Medicare premiums and Social Security benefits in 2026

If you receive Social Security and are enrolled in Medicare Part B (medical insurance) or Part D (prescription drug coverage), your premiums may change in 2026. Medicare premiums are announced in the fall and take effect January 1.

For most beneficiaries, Medicare Part B premiums are deducted directly from your Social Security payment. This means a higher Medicare premium can reduce the amount of your Social Security check you actually receive, even if your benefit amount itself increased. The hold-harmless provision protects most beneficiaries from seeing their total Social Security payment decrease due to a Medicare premium increase, but it does not explore to people newly enrolled in Medicare or those with very high incomes.

If you are approaching 65 and will enroll in Medicare in 2026, or if you are already receiving Social Security, watch for the Medicare premium announcement in October 2025 to understand how it may affect your net payment.

Taxation of Social Security benefits remains the same

The rules for whether your Social Security benefits are taxable do not change in 2026. Your benefits may be subject to federal income tax if your combined income exceeds certain thresholds. Combined income is calculated as your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.

For single filers, if combined income is between $25,000 and $34,000, up to 50 percent of your benefits may be taxable. If combined income exceeds $34,000, up to 85 percent of your benefits may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.

These income thresholds have not changed since 1984 and are not adjusted for inflation. This means more beneficiaries may find themselves subject to benefit taxation over time, even if their income has not increased in real terms.

Frequently Asked Questions

Can I still claim Social Security at 62 in 2026?

Yes. The earliest claiming age remains 62. What changes is your full retirement age, which is 67 in 2026 for people born in 1960. Claiming at 62 will result in a larger permanent reduction than it would have if your full retirement age were 66.

How much will my benefit increase in 2026?

Your benefit will increase by the COLA percentage announced in October 2025. That percentage is based on inflation data through September 2025 and cannot be predicted now. The Social Security Administration will announce the exact figure in early October 2025.

Do I have to pay taxes on my Social Security benefits?

You may have to pay federal income tax on your benefits if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly). Combined income includes your adjusted gross income, nontaxable interest, and half your Social Security benefits. The thresholds do not change in 2026.

What happens to my benefit if I work in 2026 before reaching full retirement age?

Social Security will reduce your benefit by $1 for every $2 you earn above the earnings test limit. The exact limit for 2026 will be announced in October 2025. Once you reach full retirement age, the earnings test no longer applies and you can work without any reduction.

Will my Medicare premium increase affect my Social Security payment?

Medicare Part B premiums are deducted from your Social Security payment. If premiums increase, your net payment may decrease unless the hold-harmless provision protects you. Most current beneficiaries are protected, but newly enrolled beneficiaries and those with high incomes may see a net decrease in their Social Security check.