Several Social Security Administration (SSA) changes are arriving this month for beneficiaries.
On October 15, the cost-of-living adjustment (COLA) will be finalized for next year, determining the adjustment for benefit increases to take effect in January.
Why It Matters
Around 70 million Americans rely on Social Security payments each month, and the COLA is an instrumental part of determining what exact benefit amount recipients will receive.
The current estimate is that the COLA will be 2.7 percent, but data available by October 15 will solidify the exact amount.
What To Know
If the COLA is 2.7 percent as predicted, the average monthly retirement benefit will increase by $26. If that bump is added, those who receive a $2,000 benefit now will now earn $2,054 for their monthly benefits. The SSA will announce the COLA on October 15 and subsequently add that percentage amount to all payments arriving in January and beyond.
Work credit definition changes will also be announced that day. While in 2025, one credit was defined as $1,810 in earnings, it will rise next year. Generally, you must 40 work credits to be eligible for Social Security benefits during retirement.
Also in 2026, the taxable wage base ceiling will increase, causing the wealthy to pay taxes on more of their income. While many Americans pay taxes on all of their income, high earners only pay taxes on the first $176,100 they take in.
“The changes to Social Security, while not perfect, should at least partially strengthen the program and make it easier for the increasing number of seniors who are opting to work in their golden years,” Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “The tax threshold for high income earners will increase from the current $176,100 cap, meaning more money will come into the system that is desperately needed to fund its future.”
What People Are Saying
Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek: “Looking ahead, raising the taxable wage base may help shore up Social Security’s finances, but it won’t fix the long-term solvency problem. Much like the 1993 Omnibus Bill, changes are inevitable—the question is what form Congress will decide those changes should take.”
Beene also told Newsweek: “The earnings income limits will also get a boost, which is welcome news to seniors that are still working and still want to tap into more of their benefits, but their current income precludes them from doing such. While we’re still waiting to see what income limits will be, but on the surface, it looks like a win for many who are having to stay in the workforce longer due to inflationary pressures.”
What Happens Next
Social Security will continue to undergo changes in the next few years, especially as the SSA could face a funding shortfall by as early as 2033.
“The bottom line: Social Security will look different in the years ahead,” Thompson said. “Now is the time to sit down with your financial advisor and map out what these shifts could mean for your retirement income and tax picture.”