The US government has set the cost-of-living adjustment for 2026 at 2.8%. Starting from January next year, Social Security beneficiaries will receive higher retirement benefits, but the threshold for receiving the maximum Social Security benefits has also been raised.
The Social Security Administration announced on October 24th the adjustment plan for Social Security Benefits and Supplemental Security Income for 2026. It stipulates a 2.8% cost-of-living adjustment (COLA) for the upcoming year, along with an increase in the taxable income limit. Additionally, the threshold for individuals who have not reached full retirement age but are still working and earning income to claim Social Security retirement benefits has been raised.
According to the latest plan from the SSA, in 2026, workers who have reached full retirement age can receive a maximum monthly Social Security benefit of $4,152, an increase from the 2025 limit of $4,018. Only high earners whose annual earnings from age 22 onwards have consistently reached the taxable income limit are eligible to receive the maximum Social Security benefit amount.
With a 2.8% cost-of-living adjustment, it is estimated that the average Social Security benefit for all retired workers in 2026 will increase to $2,071 per month, compared to $2,015 in 2025.
The average monthly Social Security benefits for disabled workers have also been raised, from $1,586 in 2025 to $1,630 in 2026.
For individuals who have not reached full retirement age but are receiving Social Security benefits and still working, they will face a new income threshold next year. This measure, known as the retirement earnings test, aims to limit the amount of Social Security benefits these individuals can receive.
In 2026, these Social Security benefit recipients can earn up to $24,480 annually (or $2,040 per month) before their benefits are reduced. For every $2 of income over this limit, $1 of Social Security benefits will be deducted. In 2025, the income limit set for these individuals was $23,400 annually (or $1,950 per month).
There will be some relaxation in the standards for individuals who will reach full retirement age in 2026. In the months leading up to their 2026 birthday, their annual income can reach a maximum of $65,160 (or $5,430 per month) without a reduction in Social Security benefits. For every $3 of income exceeding this limit, $1 of Social Security benefits will be deducted. In 2025, the limit was $62,160 annually (or $5,180 per month).
However, the Social Security benefits deducted due to exceeding income thresholds are only temporarily suspended. Once the Social Security beneficiary reaches full retirement age, these deducted benefits will gradually be reinstated on a monthly basis.
(Reference: CNBC)