What changes in 2026
In 2026, Social Security will see shifts in how much money you receive and what you pay into the system. The full retirement age — the age at which you receive your full benefit amount — moves up by two months for people born in 1960. The payroll tax cap, which is the maximum income subject to Social Security tax, will increase. And the cost-of-living adjustment (COLA), which raises benefit amounts each year, will be set based on inflation data from the third quarter of 2025.
These changes affect different groups of people in different ways. If you are already receiving benefits, the COLA increase will be the main change you notice. If you are still working, the higher payroll tax cap means higher-income earners will pay more into the system. If you are approaching retirement, the shift in full retirement age may change when you can claim your full benefit without reduction.
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 payroll tax cap rises in 2026, so workers earning above a certain threshold will pay Social Security tax on more of their income than they did in 2025.
- The 2026 cost-of-living adjustment will be announced in October 2025 and will raise all current benefit payments starting in January 2026.
- You can still claim benefits before full retirement age, but your monthly payment will be permanently reduced if you do.
- These changes do not affect people already receiving benefits in the same way they affect future retirees or current workers.
How full retirement age shifts in 2026
The full retirement age for people born in 1960 moves from 66 years and 10 months to 67 years. This is part of a gradual increase that began in 2003 and will continue through 2027. The change means that if you were born in 1960 and want to receive your full benefit amount without any reduction, you must wait until age 67 instead of age 66 and 10 months.
If you claim before reaching full retirement age, your benefit is reduced by a percentage that depends on how many months early you claim. The reduction is permanent — it applies to every payment you receive for the rest of your life. For someone born in 1960, claiming at 62 (the earliest age) results in a larger reduction than it would have under the previous full retirement age, because the gap between 62 and full retirement age is now larger.
Delaying your claim past full retirement age increases your benefit. For each year you wait past full retirement age, up to age 70, your benefit grows by roughly 8 percent per year. This means someone born in 1960 who waits until 70 to claim will receive a significantly higher monthly payment than someone who claims at 67.
What the payroll tax cap increase means for workers
Every year, the Social Security Administration sets a wage base limit — the maximum amount of income that is subject to Social Security payroll tax. In 2025, this cap is $168,600. In 2026, the cap will increase, though the exact amount will not be announced until October 2025. The increase is tied to average wage growth in the economy.
If you earn less than the cap, this change does not affect you. Your Social Security tax rate stays the same, and you continue to pay tax on all your wages. If you earn more than the cap, you will pay Social Security tax on a larger portion of your income in 2026 than you did in 2025. For example, if the cap rises to $175,000, a person earning $200,000 will pay Social Security tax on $175,000 instead of $168,600 — an additional $6,400 in taxable income.
Self-employed people pay both the employer and employee portions of Social Security tax, so the cap increase affects them more than it affects wage earners. Your employer withholds the employee portion from your paycheck, but you are responsible for calculating and paying the self-employed tax on your tax return.
How the 2026 cost-of-living adjustment works
The cost-of-living adjustment, or COLA, is a percentage increase applied to all Social Security benefits to account for inflation. The 2026 COLA will be based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July, August, and September 2025. The Social Security Administration will announce the exact percentage in October 2025, and the increase will take effect in January 2026.
If you are already receiving Social Security benefits, the COLA increase will raise your monthly payment. The increase is automatic — you do not need to do anything to receive it. If you are receiving Supplemental Security Income (SSI), a separate needs-based program, you will also receive a COLA increase, though SSI has different rules about how the increase is applied.
The COLA has varied significantly in recent years. In 2024, it was 3.2 percent. In 2025, it is 3.2 percent. The 2026 COLA will depend on inflation between July and September 2025. If inflation is lower than it was in that period in 2024, the COLA will be lower. If inflation is higher, the COLA will be higher.
Who is affected by these changes and who is not
People already receiving Social Security benefits will see their monthly payment increase by the 2026 COLA, but the change in full retirement age does not affect them. They claimed at a specific age in the past, and their benefit amount is locked in based on that decision.
People born in 1960 who have not yet claimed will be directly affected by the full retirement age change. If you were born in 1960 and are still working, you should understand that your full retirement age is now 67, not 66 and 10 months. This affects when you can claim your full benefit without reduction.
Workers earning above the payroll tax cap will pay more into Social Security in 2026. High-income earners, self-employed people, and employers of high-income workers all feel the impact of the cap increase. Lower-income workers are not affected by the cap change because their earnings fall below the cap in both years.
People born after 1960 will see the full retirement age continue to increase in future years. The age will reach 67 for people born in 1960 and later, and it will remain at 67 for people born in 1943 and earlier. People born between 1943 and 1960 have a full retirement age somewhere between 66 and 67.
How to plan for these changes
If you are born in 1960 and approaching retirement, review your full retirement age now. You can find this information on your Social Security Statement, which you can view online at ssa.gov by creating a my Social Security account. Knowing your full retirement age helps you decide when to claim and understand how much your benefit will be reduced if you claim early.
If you are still working and earn a high income, you may want to track the 2026 payroll tax cap when it is announced in October 2025. This helps you understand how much you will pay into Social Security in 2026 and plan your taxes accordingly. Your employer will automatically withhold the correct amount once the cap is set.
If you are receiving benefits, watch for the COLA announcement in October 2025. While the increase is automatic, knowing the amount helps you plan your budget for 2026. The Social Security Administration publishes the COLA on its website and sends notices to beneficiaries.
Frequently Asked Questions
Can I still claim Social Security at 62 in 2026?
Yes, 62 is still the earliest age you can claim. However, if you were born in 1960, your full retirement age is now 67, so claiming at 62 will result in a larger permanent reduction to your benefit than it would have under the previous full retirement age. The reduction is roughly 30 percent if you claim at 62 and your full retirement age is 67.
Will my current Social Security benefit go up in 2026?
Yes, if you are already receiving benefits, your payment will increase by the 2026 COLA, which will be announced in October 2025. The increase takes effect in January 2026 and applies to all beneficiaries, including retirees, disabled workers, and survivors.
How much will the payroll tax cap increase?
The exact amount will not be known until October 2025, when the Social Security Administration announces it based on average wage growth. In recent years, the cap has increased by roughly $5,000 to $10,000 annually, but the increase varies depending on economic conditions.
Does the full retirement age change affect people born before 1960?
No. People born in 1959 and earlier have a full retirement age of 66 or lower. The full retirement age only increases for people born in 1960 and later, and it reaches a maximum of 67 for people born in 1943 and later.
Where can I find my full retirement age?
You can view your full retirement age on your Social Security Statement at ssa.gov. Create a my Social Security account to access your statement online. You can also call Social Security at 1-800-772-1213 to ask about your full retirement age.