The Social Security Administration is making two major changes for retirees in 2026, affecting benefit amounts and earnings limits for millions of Americans.
A 2.8 percent cost-of-living adjustment will increase benefits for nearly 71 million Social Security beneficiaries beginning in January 2026, translating to an average increase of about $56 per month, according to the Social Security Administration. This COLA was announced on October 24, 2025.
The second major change involves higher earnings limits for retirees who continue working while claiming benefits. In 2026, individuals under full retirement age can earn up to $24,480 annually before the retirement earnings test applies, up from the 2025 limit. For those reaching full retirement age during 2026, the limit is $65,160 for earnings made before the month they attain full retirement age, according to the SSA.
These earnings limits determine how much Social Security withholds from monthly checks. For beneficiaries under full retirement age, $1 in benefits is withheld for every $2 earned above the limit. For those reaching full retirement age in 2026, $1 is withheld for every $3 earned above the higher threshold, but only for earnings before the month they reach full retirement age.
Expanded Benefits Under the Fairness Act
A third significant change affecting retirees stems from the Social Security Fairness Act, signed into law on January 5, 2025. The law repealed two long-standing provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which had reduced or eliminated benefits for certain retirees with government pensions.
The repeal applies retroactively to January 2024, meaning December 2023 was the last month the WEP and GPO applied, according to GovExec.com. The Social Security Administration began issuing retroactive benefit payments and increasing monthly payments starting February 25, 2025, for individuals impacted by these repealed provisions.
The law affects approximately 3.2 million retirees, including teachers, firefighters, police officers, and other public sector workers who had their Social Security benefits reduced due to pensions from non-covered employment, according to Mercer Advisors. Eligible beneficiaries received lump-sum retroactive payments covering the benefit increase from January 2024 forward.
The earnings limit increases are part of the SSA’s annual adjustments tied to wage growth. The 2026 earnings thresholds represent increases of $1,080 for those under full retirement age and $3,000 for those reaching full retirement age compared to 2025 limits, according to the National Active and Retired Federal Employees Association.
Sources
- Social Security Administration — 2.8% COLA announcement and 2026 earnings limits
- GovExec.com — Fairness Act retroactivity details and December 2023 cutoff
- Mercer Advisors — 3.2 million retirees affected by WEP/GPO repeal
- National Active and Retired Federal Employees Association — 2026 earnings limit increases
