A Modest Social Security Bump—and a Bigger Planning Conversation

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Social Security is getting another cost-of-living raise—about 2.7 % for 2026.

It’s a small increase, but it’s also a good reminder to look at how Social Security fits into your overall retirement plan. The conversation around benefit adjustments and the system’s long-term solvency is heating up again, so now’s a good time to separate facts from fear and make sure your plan stays flexible.

What’s changed

• The cost-of-living adjustment (COLA) for Social Security benefits is about 2.7 %–2.8 % for 2026.
• A retiree receiving US $2,000 per month will see an extra US $50–US $60 monthly before taxes.
• No changes yet to benefit formulas or retirement-age rules under current legislation.

Why this matters

• Modest COLAs help offset inflation, but most retirees still see costs rise faster than benefits.
• If you’re close to claiming, review how timing affects your lifetime income.
• Understand how Social Security interacts with other income—pensions, withdrawals, and investment earnings—to manage taxes and cash flow.
• The small rise is a good prompt to revisit your budget and inflation assumptions.

Solvency & long-term planning

The concerns:

• Social Security’s trust funds could be depleted around 2033–2034, according to current SSA projections.
• Payroll taxes would still fund roughly 75 – 80 % of scheduled benefits.
• Without reform, gradual benefit reductions or higher taxes may be required.

The context:

• “Running out” doesn’t mean checks stop—it means the system would have to rely only on ongoing payroll tax revenue.
• Lawmakers have strong incentives to protect benefits, so fixes are expected, though timing is uncertain.
• The right takeaway is not panic—but preparation. Build flexibility into your plan and maintain multiple income streams.

Key planning actions

• Verify your benefit amount through your SSA account and confirm deposits.
• Review tax exposure—especially if you draw income from IRAs, pensions, or investments.
• Revisit claiming age decisions to see how deferring could improve long-term income security.
• Stress-test your retirement plan for different inflation and benefit-reduction scenarios.
• Stay informed—policy changes may come gradually, and small tweaks can affect your overall plan.

Related: How the “Big Beautiful Bill” Reshapes Your Tax Plan

Final thoughts

Social Security remains a foundation of retirement income, but it shouldn’t be the only pillar. The 2.7 % increase is helpful, yet small. Use it as a cue to re-evaluate your income strategy, confirm your numbers, and make sure your plan can adapt—regardless of what happens in Washington.

Related: Year-End Tax Planning Checklist